CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
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Mount Meru Hotel, Arusha
Friday, 6th February 2015

My Fellow EAC Central Bank Governors;
Delegates from the EAC Central Banks;
EAC Secretariat Officials;
Distinguished Guests;
Ladies and Gentlemen:
Good morning. First of all, I would like to extend my sincere
appreciation to the Governor and the entire management of the
Bank of Tanzania for the excellent organization and hospitality
extended to me and my team from Central Bank of Kenya.
Fellow Governors, we are meeting for the first time since the
ratification of the East Africa Monetary Union (EAMU) Protocol
by all the Partner States. This not only demonstrates the
political will and commitment of our respective Governments
but places a weighty responsibility on all stakeholders involved
in implementation of the roadmap towards the single currency.
In this regard, EAC central banks are expected to identify and
deliver on activities within their mandate as well as collaborate
with other stakeholders to ensure all the critical ingredients for
a monetary union, as proposed in the EAMU Protocol, are well
articulated and implemented.
Fellow Governors, the Extra-Ordinary MAC meeting held in
Naivasha in November 2014 identified strategic objectives and

priority areas towards operationalization of the EAMU Protocol
that fall under the mandate of Central Banks and developed an
action plan for implementation. We now have the onerous task
of taking this to the next level especially now that the EAMU
Protocol has been ratified by all Partners States.
Fellow Governors, the ratification of the EAMU Protocol set the
stage for the establishment of the policy, legal and institutional
frameworks to support the creation of a single currency area.
EAC Central Banks are expected to play a pivotal role in the
process leading to the establishment of the four institutions
responsible for the implementation of the EAMU Roadmap.
These institutions include the East African Monetary Institute
(EAMI) to undertake the preparatory work for the Monetary
Union – this will fall heavily on the Central Banks; The East
African Surveillance, Compliance and Enforcement Commission
– this will require some input from us; The East African
Statistics Bureau – we have a role to pay here; and The East
African Financial Services Commission. S0, time management
and planning is important. I note that the timeline for the
establishment of EAMI is 2015 while the other three
institutions are to be established by 2018. Given that banks
dominate, our regulatory capacity and technology will be
required.

Fellow Governors, Central Banks are also expected to support the
development and integration of the financial system as well as
the implementation of other priority areas of the EAMU Protocol
including the attainment of Macroeconomic Convergence (by
2021), Harmonization of Monetary and Exchange rate
Operations (by 2022) and Introduction of the Single Currency
(by 2024). Realization of these milestones takes time and in
some cases may require review of the policy, legal and
regulatory frameworks governing the financial system, payments
and settlement systems as well as adoption of common principles
and rules for the regulation and supervision of the financial
system. In this regard, we need to develop requisite capacity,
within Central Banks and the region at large, to undertake
preparatory work for the EAMU.
I wish to commend our technical staff who have worked
tirelessly over the past few days to produce a very comprehensive
report. I also extend appreciation to the EAC Secretariat for
their support in our activities as well as reaching out to
Development Partners who have continued to support the EAMU
process. In particular I take cognizance of the IMF’s continued
partnership with EAC countries in the modernization of our
policy frameworks.

Fellow Governors, I assure you of the Central Bank of Kenya’s
commitment to operationalization of the EAMU Protocol. As you
very well know we have to open and close many doors of our
working life. Time has come for me to close the central banking
one, which was a special one for me in the sense that my
engagement as Governor of the CBK gave me a rare opportunity
to conduct monetary policy in practice. Some theories we held so
dear have been put to the test and they were found to work even
better in practice. I leave the Central Bank with a great sense of
pride and accomplishment, which I can not do ample justice to
highlight within the short space of time that I have now. I am
sure another forum will open where I will share more broadly
my experience while serving at the helm of Kenya's financial
sector. But one important accomplishment for us all is that we
have transformed our Central Banks into strong institutions.
They have promoted operations by defining the appropriate
rules and developed the financial markets using a combination
of appropriate rules of the game and appropriate
incentives/(penalties) to encourage prudent behavior in the
market. I enjoyed your trust and warm companionship, and
notably your commitment in driving and modernizing the
financial sector in the region over the last 8 years of my term.
Let me conclude by once again, thanking the Bank of Tanzania

for the warm welcome and hospitality. With these few remarks, I
look forward to fruitful engagement in discharging our mandate
in this meeting.
THANK YOU