EAC central banks cling to accommodative financial policy
The East African Community (EAC) partner states’ central banks have vowed to hold to the region’s accommodative policy.
This was agreed during the virtual 25th ordinary meeting of the East African Community (EAC) Monetary Affairs Committee (MAC) held on Friday.
The meeting was shared by the Governor of the Central Bank of Kenya, and the incumbent chairperson of MAC, Dr. Patrick Njoroge.
In a communiqué, the EAC partner states’ Central Banks expressed willingness to continue with the relaxation of policies regarding loans restructuring, extended lending facilities, exceptional liquidity assistance, and reduced charges on mobile transactions.
“The meeting was held against a backdrop of rising global inflation, tightening financial conditions, and worsening debt vulnerabilities for developing economies owing to the protracted COVID-19 pandemic, and geopolitical tensions,” the statement read in part.
“To manage these developments, most EAC Partner States Central Banks continued with accommodative policy stance complemented by regulatory changes including relaxation of rules on loan classification, restructuring, extended lending facilities, exceptional liquidity assistance, and reduced charges on mobile transactions to support financial intermediation and digitalization. The Committee also took note of the increasing financial innovations.”
The committee reported that there was a massive economic recovery in the EAC region in 2021 with an average of 4.2 percent as a result of COVID-19 restrictions, public investments, agriculture, services, construction and manufacturing.
“Growth in the region is expected to improve supported by a resumption of global economic activity with the easing of containment measures and sustained implementation of growth-supporting measures.”
“Downside risks remain elevated due to a slower global growth, rising geopolitical tensions and increasing commodity,” the statement read.
The committee stressed that the EAC would make steady progress in the cross-border payment systems through national initiatives, and the East African Payment System (EAPS) by persuading stakeholders to champion regional integration through cross-border payment.
The EAC Partner States’ Central Banks were commended for creating East African Monetary Union (EAMU), especially the East African Monetary Institute (EAMI), harmonization of exchange rate policies, harmonization of regulatory frameworks, implementation of measures to strengthen regional payments systems, enhancing of cyber security frameworks, capacity building in risk management for central banks and promotion of cross-border trade.
The meeting was attended by the governor of the bank of South Sudan, Moses Makur Deng, the deputy governor of the bank of the Republic of Burundi, Audace Niyonzima, the deputy governor of the national bank of Rwanda, Soraya M. Hakuziyaremye, the deputy governor of the bank of Uganda, Michael Atingi-Ego, and the deputy governor of the bank of Tanzania, Yamungu Kayandabila.
Regional integration
In December 2021, the Secretary-General of the East African Community (EAC), Peter Mathuki, said the community would strengthen regional integration in the year 2022.
The EAC boss pledged the community’s interest in championing the intra-EAC trade, easing regional mobility of persons, goods and services, widening markets and uplifting peace and security.
“A new year offers us a new chapter to hit the reset button, craft a new course for our prosperity and build back better. Despite a challenging and tumultuous 2021, we remained resilient and committed in our quest to widen and deepen economic, political, social and cultural integration in order to improve the quality of life of the people of East Africa,” he said.
“Our core focus in 2022 will be to continue deepening regional integration to ensure enhanced Intra-EAC trade, ease regional movement of persons, services and goods, widening markets, promoting peace and security for a strengthened bloc.”
He cautioned the partner states on the dire implications of the omicron variant, and urged them to devise ways of limiting its effects in the region.
“With the recent surge in Covid-19 cases occasioned by the new Omicron variant, I urge you all to remain vigilant and protect yourselves and those around you. Together, we shall defeat the virus,” he said.
“The EAC deeply appreciates all our partners and stakeholders for the dedication to the regional integration agenda and look forward to your continued cooperation and synergy as we welcome the New Year. It is my hope and prayer that 2022 will be a more bountiful year, especially with the anticipated entry of the Democratic Republic of Congo into the EAC family.”
