CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
SSUUBB--CCOOMMMMIITTTTEEEE OOFF MMAACC
Sarova Stanley Hotel, Nairobi
April 3, 2012

IMF and IGC officials present;
Distinguished delegates from EAC Partner States Central Banks and
EAC Secretariat;
Ladies and Gentlemen:
The Central Bank of Kenya is delighted and honoured to host you in this
workshop aimed at reviewing the various studies under MAC priority activities
that will assist in understanding the policy terrain and the process of EAMU
protocol negotiation. The EAC has a target of moving towards a Monetary Union
and this meeting will improve and further consolidate our understanding of the
EAMU process and invigorate and guide our integration agenda. On behalf of
the Central Bank of Kenya, let me take this early opportunity to thank all those
who have contributed to the organization of this workshop and all the
participants and resource persons. I wish you an enjoyable stay in Nairobi.
Ladies and Gentlemen; The Monetary Affairs Committee (MAC) of the EAC
Central Bank Governors is working on various fronts to provide a knowledge
base for exchange rate and monetary policy frameworks and how the policy
designs can be applied in EAC. This will support the East African Monetary
Union (EAMU) protocol negotiation, currently underway. In order to fast track
this process, Governors met in June 2010 and identified and apportioned the
various priority study areas that would ensure that the decisions taken on EAMU
are informed and policy proposals are consistent with the aspirations of EAC.
The Central Banks of EAC identified three levels of this process:
Analytical and design work, which entails immediate activities to improve
the understanding of the entire EAMU process, especially the pre-conditions
for EAMU establishment and the institutional set up;
Harmonization of operating frameworks, which entails undertaking all
the activities that will result in the harmonization of EAC Partner States’
operating frameworks, thereby setting the stage for enhanced convergence in
not only policies, but also the required structures; and,

The above blocks will deliver the input to the policy regimes block, which
entail the tools for negotiating the EAMU protocol. This block is being dealt
with by the High Level Task Force (HLTF).
Distinguished delegates: The output from the first two blocks is meant to
provide the technical input required to inform the HLTF, a body mandated to
negotiate the EAMU protocol. The East African Monetary Union is currently
being negotiated by the Partner States. The HLTF is preoccupied with
negotiating policy issues of the monetary union integration, especially the
creation of common frameworks across the member countries in order to
facilitate the institutional arrangement envisaged in the process towards the
EAMU.
Ladies and gentlemen: It is within this context that two separate studies were
identified under the ‘analytical and harmonization platforms’ of MAC’s priority
activities. The first study is on the “Harmonization of the Monetary Policy
Framework for the EAC Partner States” being undertaken by the International
Monetary Fund (IMF) and the second study is on the “Exchange Rate
Arrangements in the EAC” being undertaken by the International Growth Centre
(IGC). The two institutions have undertaken the studies in collaboration with
Partner States Central Banks, and we are really grateful for this technical
support.
Since the inception reports, the final report of the two studies we are reviewing
today is a culmination of a lot of work at the technical level. There was a meeting
held in August 2011 here in Nairobi to review the progress, besides the various
presentations and feedback during the different Ordinary and Extra-ordinary
MAC meetings. This attests to the quality of output expected from these two
studies.
Distinguished delegates: I believe that there is a great wealth of experiences
and ideas to be shared in this workshop given the diversity in the knowledge base
of participants gathered here. By the end of this workshop, we shall have a better
understanding of how the region’s exchange rate arrangements can be aligned to
a common regime and how monetary policy frameworks can be harmonized in
the process of the envisaged East African Community. With these few remarks,

Ladies and Gentlemen, I declare this workshop open and wish you fruitful
discussions.
Thank you