Njuguna Ndung'u: Working towards an East African Monetary Union
Remarks by Prof Njuguna Ndung'u, Governor of the Central Bank of Kenya, at the opening
of the meetings of the Economic Affairs Sub-Committee of the Monetary Affairs Committee
MAC, Nairobi, 3 April 2012.
* * *
MF 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.