EAC officials begin review of proposed single currency law

The search for East Africa’s single currency enters a critical stage this week as top advisers for governments gather in Arusha to review its legal framework.

The region’s legal and judicial affairs committee is expected approve the draft Monetary Union Protocol at the three-day forum that begins Monday.

The document was drafted in July after three years of protracted negotiations that saw a team of economists and capital markets specialists assembled by member states in early 2011 agree on all its 77 articles.

“The text has been reviewed by solicitors and attorneys general,” said Richard Sindiga, head of economic affairs division at Kenya’s EAC Affairs department.

“All that is left is for its legal text to be approved by ministers in charge of legal and judicial affairs before it is taken back to the council of ministers.”

The approval of the draft Monetary Union Protocol this week will pave the way for its signing by bloc’s heads of state when they hold their annual summit in November.

Among key highlights, the protocol hands the region’s council of ministers discretion of the funding and share capital of each member state on the proposed East African Central Bank (EACB).

Its implementation will see central banks in the region depositing foreign exchange reserves with the EACB to prop up the common currency.

The council of ministers rather than national central bank chiefs will determine the amount and type of foreign reserve assets to be transferred EACB.

“The 2013/4 financial year will witness the conclusion and signing of the EAMU Protocol with a view to signing the protocol at the 15th Summit of the EAC Heads of State scheduled for November 2013,” Shem Bageine, chairman of EAC council of ministers said when he launched the region’s budget statement.