Kenya says best suited to host East African central bank

Kenya is lobbying to host the East African Monetary Institute— the Central Bank of East Africa — as it seeks to enhance its financial hub status.

Officials say the country has the facilities and capacity at the Kenya School of Monetary Studies to host the institute.

We expect that we will be able to secure this position,” said Christopher Kiptoo, director economic policy coordination in the office of the prime minister.

Kenya currently hosting the Comesa Monetary Institute at the Kenya School of Monetary Studies has the most developed financial markets in the East African Community (EAC).

“We are already hosting the Comesa Institute and it should be very easy for us to host the East African Monetary Institute because the two bodies are similar in operations,” said Richard Sindiga, director economic affairs Ministry of EAC.

Mr Sindiga said the institution will enhance Kenya’s position in the EAC, helping to lure foreign investors.

He said with the ongoing harmonisation of the regional trading blocs such as Comesa, Igad, Sadc and EAC, there will be need to have only one institute and most likely the already existent Comesa Institute. The host country will have the opportunity of being a financial hub of the East, Central and Southern Africa.

The negotiations on who will host the central bank is expected to renew political supremacy wars in EAC.

“The negotiations over the host of the region’s central bank will spur political disputes just as witnessed when the European Union was planning a location for the European Central Bank,” said Mr Kiptoo.

The Central Bank of East Africa will be established at least six months before the monetary union comes into force in 2015, said Mr Kiptoo.

The bank will be a temporary institution that will put in place the necessary requirements for the running of a monetary union and the introduction of a single currency and the eventual formation of the East Africa Central Bank. Kenya’s profile has been raised in recent years with the set up of regional offices in Nairobi by multinationals like Nokia, Coca Cola, Standard Chartered Bank, Hong Kong and Shanghai Banking Cooperation (HSBC).

This has been driven by increased political stability following the promulgation of the new constitution and improved infrastructure.

Uniform standards

Officials are currently working at to harmonise the operations of the various ministries in the region such as the Ministry of East African Community, Ministry of Trade, and the Ministry of Foreign Affairs to gain maximum returns from regional integration negotiations.

The Capital Markets Authority is also working to put in place a futures exchange that will open up more opportunities for EAC investors helping grow the regional financial sector.