Press Release

Arusha Conference Calls for Further Integration and Reforms in EAC on the Road to a Monetary Union

The East African Community (EAC) Secretariat, the European Union (EU), and the International Monetary Fund (IMF) jointly organized a high-level conference entitled “Regional Integration in the EAC: Making the Most of the Common Market on the Road to a Monetary Union” in Arusha, Tanzania on October 31–November 1, 2016. Discussions focused on progress in establishing Customs Union and Common Market so far, steps for strengthening them, and the prerequisites for an effective transition to East African Monetary Union (EAMU).

The conference brought together Finance Ministers and Ministers in charge of regional cooperation, Central Bank Governors, other senior policymakers, regional capital markets regulators, academics, civil society, and private sector leaders from across EAC member countries, as well as senior representatives from international financial institutions and other monetary unions. Policymakers of the EAC region reaffirmed their commitment to build a strong economic and monetary union.

Participants assessed the current state and pace of economic integration since the inception of the Customs Union in 2005 and the Common Market in 2010. Participants noted considerable progress towards a single entry visa, processing times at ports, and removal of internal tariffs. As indicated in the second EAC Common Market Scorecard 2016 which evaluates Partner States’ compliance to the free movement of capital, services, and goods, private sector representatives in particular underlined the need for further progress in the areas of non-tariff barriers, rules of origin, tax administration and harmonization, automation of trade process, and labor mobility to facilitate trade of goods and services further. Given experiences in other regions, sequential harmonization could be pursued in implementing the single customs territory and tax harmonization. Accountability and ownership are critical to a successful integration process.

Considerable progress has been made in financial sector integration, including integration of the payment systems and financial markets. In this regard, participants noted still high compliance cost in light of different regulations in member countries. On the Fintech front, however, the EAC region is ahead of many other countries in the world. The importance of proper sequencing and pace of financial integration was stressed in light of risks involved.

Under the theme “The Road toward a Monetary Union,” the status of macroeconomic convergence in the EAC was discussed. Participants acknowledged that fiscal deficits need to be brought down to meet the convergence criterion and to ensure the stability of the future monetary union. Convergence goes beyond headline fiscal deficits and public debt, and fiscal risks need to be monitored closely. Moreover, further progress is needed in data harmonization and monetary policy frameworks and operations, and there is a need to establish the new institutions that will play a key role for the implementation and resilience of the union.

The program, speeches and presentations to the conference are available at:

http://www.imf.org/en/News/Events/Regional-Integration-in-the-EAC.

Following the conference, a forum on “Improvements in East African Statistics Through Capacity Development,” highlighted recent improvements in economic and financial statistics in EAC countries through capacity development initiatives supported by the EAC Secretariat and the IMF.

5th EAC University Students’ Debate on Regional Integration ongoing at the Kigali Independent University

The 5th EAC University students’ debate, themed “Youth Participation in Electoral Democracy,” is taking place from 31st October to 3rd November 2016 at the Kigali Independent University in Kigali, Rwanda. The debate has brought together various participants including University students as well as lecturers, academia, policy makers, media, youth leaders and high school students from Uganda, Kenya, United Republic of Tanzania, and Rwanda, the host country.

The EAC University Students’ Debate Model is an interactive and representational style of debating aimed at educating, discussing and making resolutions among the Youth in East African to nurture a bond of “Eastafricaness” with a distinct East African identity.

The objective of the EAC University students’ Debate Model is to exchange information, share ideas and develop a common ground among the students and youth in the bloc.

The Motion for this year’s debate is “This House believes that effective Youth participation in Electoral Processes is a prerequisite for attaining sustainable Electoral Democracy in the East African Community.”

Officiating at the official opening of the Debate, Rwanda’s Minister of Trade, Industry and EAC Affairs, Hon. Francois Kanimba, challenged the students and youth in general to seize the opportunities being presented by the EAC integration process to advance their careers and sources of livelihood.

The Minister said the youth represent a larger demographic portion and constitute more than 63% of the EAC population hence they have a huge role to play in shaping the EAC they want.

“The energy, ideas and enthusiasm that you will demonstrate here are part of the solution to achieving a realistic EAC and Africa that we want. Our region needs a new generation of problem-solvers, who take positive actions and see farther, and work smarter to achieve the EAC vision,” said Hon. Kanimba.

Hon. Kanimba disclosed that under the Northern Corridor Integration project, Partner States had agreed to harmonize tuition and non-tuition fees with the aim of facilitating the free movement of people including students in within the Community. “Therefore, utilize these facilities well so that the dream of a prosperous East African Community can become a reality.”

Welcoming the Debaters, students and guests to the Kigali Independent University, the University’s Vice Chancellor; Dr. Sekibibi Ezechiel, commended the EAC Secretariat for choosing the institution to host the debate and urged the youth and students to passionately get involved in the regional integration process.

At the same function, the EAC Deputy Secretary General in charge of Political Federation, Mr. Charles Njoroge, said the theme of this year’s debate was timely and that the vitality of Youth participation in electoral democracy cannot be left to the whims of anyone but was a fundamental constitutional right that is encapsulated in most EAC Partner States’ Constitutions and the EAC Treaty.

“Participation is thus a component of democracy for young leaders in East Africa, which enables them to passionately cherish and jealously guard the principles of democratic governance in facilitating development of our region,” said Mr. Njoroge.

The Deputy Secretary General advised the youth to refrain from violence, corruption, and to always abhor divisive politics, which could endanger the unity and oneness of the people both within and among the Partner States, to ensure that the regional motto of “One People, One Destiny” is sustained.

He reiterated the need for Youth leaders to understand their societal values required to provide effective leadership in the EAC, which include upholding unity in diversity, being accountable and ensuring transparency, and Team work, as key to success.

“The East African Community is your region and your future. You need to collectively guard it well with an ultimate goal of attaining a Political Federation,” the Deputy Secretary General affirmed.

Mr. Njoroge informed the audience that since the inception of the Youth Debate in 2012, the Secretariat has been able to register tremendous achievements in EAC youth activities, which include the appointment of EAC Youth Ambassadors and their Deputies each year in every Partner State, adding that the Youth Ambassadors have competently taken up the mantle of continuing the dialogue; and reaching out to fellow young people throughout the region on the EAC integration.

Benchmark with the Best in the World, EAC Partner States urged

East African Community Partner States have been challenged to benchmark themselves with the world’s most advanced economies if they are to grow their economies.

Hon. Amanya Mushega, a former EAC Secretary General, said the EAC needs to revisit and do away with the standard way of judging itself by Sub-Saharan African standards.

“India, Singapore and South Africa, just to mention but a few refused to treat themselves that way. They aimed high, looked at the way the USA, Japan, Germany, UK and the USSR developed their human resources, copied them with the view to competing with them and not fellow third world countries and the results are out,” said Hon. Mushega.

“Our problem of remaining poor and beggars is not lack of money or natural resources, it is our mindset. We have put the bar too low. We are not going to be competing with Gambia or Haiti but with Korea, Japan and China, first for our own EAC market and secondly, for the world market,” he added.

Hon. Mushega called for heavy investment by the Partner States in human resource development, and urged the Community to compare the number and quality of local skills with those countries that have prospered rather than the comfort zone of Sub-Saharan Africa.

“For EAC to develop, exploit its resources, build industries, not cutting and wrapping imported products for it to build and maintain roads, railways, airports and dams, compete in local and world markets, it must put maximum efforts on the quality of education and skills of its population. Don’t say but we are ok. We are not. The EAC is not yet our market,” said the retired diplomat.

Hon. Mushega was giving a keynote address titled The Hidden Challenges to Integration and the Way Forward during the opening of the two-day EAC-EU-IMF Conference on Regional Integration in Arusha, Tanzania. The theme of the conference is “Regional Integration in the EAC: Making the most of the Common Market on the Road to a Monetary Union.”

Speaking at the forum, Mr. Abebe Aemro Selassie, disclosed that at six (6) per cent, real GDP growth in the EAC in 2016 was expected to be well above the average for Sub-Saharan Africa, adding that prospects for 2017/18 also remain strong.

Mr. Selassie said that the challenge for the EAC as for other fast growing countries in Sub-Saharan Africa was how to sustain this growth over the medium term, how to ensure that scaled-up public investment and borrowing translates into durable growth and not unserviceable debt, and how to make this growth more inclusive.

“Faster economic growth within the EAC is therefore a potential “game changer” as it holds the promise of improved productivity, competitiveness and welfare gains,” said the IMF official.

He noted that while significant progress had been made since the inception of the EAC Customs Union and the Common Market including the establishment of a Single Customs Territory with a Common External Tariff and effective elimination of internal tariffs for goods meeting Rules of Origin – there is still work to be done.

“Customs valuation procedures have also varied across the region, despite the approval of the EAC Customs Valuation Manual,” he observed.

In her remarks, Hon. Jesca Eriyo, the EAC Deputy Secretary General (Finance and Administration), said that the Community had made significant progress in the areas of trade, financial and macroeconomic integration as well as building institutions necessary to support the integration process.

“The integration process is benefiting the East African people through increased trade, efficiency and productivity and enhanced financial integration. The recently established Single Customs Territory continues to deliver significant benefits to East Africans, including reduced transit times from port to destinations and fewer documentary requirements,” said Hon. Eriyo.

Hon. Eriyo revealed that financial integration in the EAC was deepening and that free movement of labour was becoming a reality, partly aided by the Mutual Recognition Agreements among professional associations including those for architects, accountants and veterinary officers.

She said that to ensure macroeconomic convergence ahead of the monetary union, convergence criteria pertaining to inflation, foreign exchange reserves, fiscal deficits and public debt would have to be achieved and observed.

“The purpose of the convergence process is to ensure that countries enter the monetary union without major disequilibria that could threaten its stability. However, convergence is not an automatic process. The experience of the Euro area shows that a set of mechanisms involving institutions and the use of incentives and corrective procedures to deal with deviations from pre-determined paths, have been needed to achieve convergence and keep union members aligned,” said the DSG.

The conference is being attended by international economists, leading policy makers from the region, ministers of finance, central bank governors, and senior treasury/finance officials, regional capital markets regulators, academics, senior staff from international financial institutions, senior representatives from other monetary unions and civil society organizations, and private sector leaders from the region.

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East African Community
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