Negotiations on the proposed East African Monetary Union (EAMU) should be concluded in August for signing in November this year, the regional leaders’ summit directed yesterday.However, experts say several issues need to be addressed to pave the way for an effective monetary union.
The 11th extra-ordinary summit of the East African Community (EAC) heads of state held at Ngurdoto Mountain Lodge in Arusha urged the partner states to ensure negotiations were completed according to the schedule so that the long-awaited protocol could be signed during the next summit.
The Arusha Summit was attended by presidents Jakaya Kikwete, Uhuru Kenyatta of Kenya, Pierre Nkurunziza (Burundi) and Yoweri Museveni (Uganda) and Rwandan Prime Minister Pierre Habumuremyi and Zanzibar Second Vice President Seif Ali Idd.
Reading the joint communiqué at the end of the meeting, EAC Secretary-General Richard Sezibera said the Sectoral Council on Monetary Union would meet on Saturday to consider and give guidance to the draft protocol.
This will be followed by two ministerial meetings in July, one of which will give a legal input for the protocol in readiness for consideration and signing by the heads of state during their ordinary summit in November.
Negotiations for the protocol started in January 2011 and were among the key agendas of yesterday’s summit. Tentatively, the protocol could be signed in November, but experts have observed that this would also depend on how the partner states resolved a range of issues to pave the way for the pact.
The Arusha Summit was attended by presidents Jakaya Kikwete, Uhuru Kenyatta of Kenya, Pierre Nkurunziza (Burundi) and Yoweri Museveni (Uganda) and Rwandan Prime Minister Pierre Habumuremyi and Zanzibar Second Vice President Seif Ali Idd.
Reading the joint communiqué at the end of the meeting, EAC Secretary-General Richard Sezibera said the Sectoral Council on Monetary Union would meet on Saturday to consider and give guidance to the draft protocol.
This will be followed by two ministerial meetings in July, one of which will give a legal input for the protocol in readiness for consideration and signing by the heads of state during their ordinary summit in November.
Negotiations for the protocol started in January 2011 and were among the key agendas of yesterday’s summit. Tentatively, the protocol could be signed in November, but experts have observed that this would also depend on how the partner states resolved a range of issues to pave the way for the pact.
Despite EAC leaders’ desire to see the monetary union up and running, experts have pointed out several technicalities that are likely to further delay the conclusion of the process.
Key among the technicalities that have to be ironed out are the scope of EAMU, institutions necessary for its proper functioning, the macroeconomic convergence criteria and management of foreign reserves.
Others are the funding mechanism, transitional arrangements covering temporary and permanent institutions to be established during the transitional stage and harmonisation and coordination of fiscal policies.
Separate fiscal policies for a country in a single monetary union have been blamed for some of the major economic difficulties facing the Eurozone, and the EAC could face similar problems if the issue is not handled well, experts say.
A report of last week’s ministerial meeting that preceded the summit said experts working on the monetary union had observed considerable challenges with harmonisation and coordination of taxation.
“Partner states are at different levels of economic development and, therefore, need to provide for a provision for partner sates not to engage in harmful tax competition”, said the report seen by The Citizen.
On the establishment of the EAC Economic Stabilisation Policy, the experts maintained the facility should be established but the modalities and mechanism for its operation be left to be handled through a bill.
Key among the technicalities that have to be ironed out are the scope of EAMU, institutions necessary for its proper functioning, the macroeconomic convergence criteria and management of foreign reserves.
Others are the funding mechanism, transitional arrangements covering temporary and permanent institutions to be established during the transitional stage and harmonisation and coordination of fiscal policies.
Separate fiscal policies for a country in a single monetary union have been blamed for some of the major economic difficulties facing the Eurozone, and the EAC could face similar problems if the issue is not handled well, experts say.
A report of last week’s ministerial meeting that preceded the summit said experts working on the monetary union had observed considerable challenges with harmonisation and coordination of taxation.
“Partner states are at different levels of economic development and, therefore, need to provide for a provision for partner sates not to engage in harmful tax competition”, said the report seen by The Citizen.
On the establishment of the EAC Economic Stabilisation Policy, the experts maintained the facility should be established but the modalities and mechanism for its operation be left to be handled through a bill.
Institutions proposed for establishment under EAMU include the East African Financial Services Authority, East African Surveillance and Enforcement Commission and the East African Statistics Bureau.
The High Level Task Force (HLTF) observed names of the institutions should not be spelt out in the EAMU protocol, but provisions establishing each of these institutions be maintained “as they are critical to support the EAC Central Bank”.
The High Level Task Force (HLTF) observed names of the institutions should not be spelt out in the EAMU protocol, but provisions establishing each of these institutions be maintained “as they are critical to support the EAC Central Bank”.
In another development, the summit yesterday did not also agree on the extension of the jurisdiction of the East African Court of Justice (EACJ) to include crimes against humanity.
Instead, the summit resolved that the five partners in the bloc – Tanzania, Uganda, Kenya, Burundi and Rwanda – should consult further on the matter.
The previous summit had directed the Arusha-based secretariat to prepare a technical paper on how the powers of the Court can be extended to cover human crimes.
Instead, the summit resolved that the five partners in the bloc – Tanzania, Uganda, Kenya, Burundi and Rwanda – should consult further on the matter.
The previous summit had directed the Arusha-based secretariat to prepare a technical paper on how the powers of the Court can be extended to cover human crimes.
The court, which is a judicial arm of EAC was launched in November 2001, is mandated to determine or arbitrate disputes arising out of cooperation among the member countries to the community.
That is despite Article 27 of the EAC Treaty providing the possibility for extension of its jurisdiction at a suitable subsequent date to include “such other original, appellate, human rights and other jurisdictions as determined by the EAC Council of Ministers”
The summit appointed former director general of the Communication Council of Kenya (CCK) Charles Jackson Njoroge as the new EAC deputy secretary general to replace another Kenyan national, Dr Julius Rotich, whose three-year tenure ends in June.
Mr Njoroge was sworn in along two new EACJ judges Faustine Ntezilyayo from Rwanda and Liboine Nkurunzinza from Burundi. Justice John Bosco Butasi was appointed the principal judge of the Court to replace Johnstone Busingye whose tenure is coming to an end.
That is despite Article 27 of the EAC Treaty providing the possibility for extension of its jurisdiction at a suitable subsequent date to include “such other original, appellate, human rights and other jurisdictions as determined by the EAC Council of Ministers”
The summit appointed former director general of the Communication Council of Kenya (CCK) Charles Jackson Njoroge as the new EAC deputy secretary general to replace another Kenyan national, Dr Julius Rotich, whose three-year tenure ends in June.
Mr Njoroge was sworn in along two new EACJ judges Faustine Ntezilyayo from Rwanda and Liboine Nkurunzinza from Burundi. Justice John Bosco Butasi was appointed the principal judge of the Court to replace Johnstone Busingye whose tenure is coming to an end.
Yesterday, the East African leaders sent a strong signal that the region would not tolerate any insecurity or destabilisation that would scare off investors or undermine its development efforts.
They said with major oil and gas discoveries made, the region must get rid of any threats posed to derail its quest to settle down and tap the vast natural resources for development.
They said with major oil and gas discoveries made, the region must get rid of any threats posed to derail its quest to settle down and tap the vast natural resources for development.
Source: The Citizen, reported by Zephania Ubwani in Arusha
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