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. bis central bankers ’ speeches 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. bis central bankers ’ speeches

productive investments benefitting the society in large. lack of hr policies and professionalism 17. the quality of human resources is an important determinant of the success of any organization. this aspect, however, has not received due importance in the cooperative institutions. the cooperative banks are headed by a committee of elected members who are not professionals and do not possess sound knowledge in banking functions. the committee takes crucial business decisions involving sanction of loans, investments, interest rates on deposits and loans, etc. which require a minimum degree of skill and expertise. often, the role of chief executive officers in these areas is minimal. 18. cooperatives do not have well defined capacity building and hr policies in crucial areas like recruitment, placement, training, career progression, succession planning, etc. recruitments are done without any objective and systematic manpower assessment. all these have led to inefficiency and lower productivity. though there is a system of training in place in many cooperative banks, there is no need - assessment to align training with the current and future staff requirements. training programs should be designed to achieve skill upgradation in areas related to audit and expenditure, management and aptitude development. it is also necessary to keep the staff sufficiently motivated through periodic job rotation, job enrichment and recognition of performance. poor recovery performance 19. frequent loan waiver announcements by governments aimed to garner electoral support have vitiated the credit discipline among the borrowers and affected the recovery atmosphere. the resultant weak finances, growing npas and poor resource base have contributed to the declining performance of the cooperatives, particularly at the grass root level. since these grass root institutions depend on liquidity support from higher financing bis central bankers ’ speeches agencies like state and central cooperative banks, non - payment of dues impairs the financial health of the entire chain. inadequate internal control and audit 20. cooperatives do not pay attention to implementation of adequate and foolproof internal checks and control. balancing of books and reconciliation of entries are in arrears for unduly long periods. as a result, there is frequent incidence of frauds involving the staff who game the system. very often, these cases are held up due to protracted litigation in courts of law and the guilty are not brought to book. there is absence of effective audit mechanism. there are delays in the conduct of audits and submission of reports. quality of audit leaves much to be desired in as much as it fails to address the gaps in the systems and processes and