Kenya crisis worries EAC bank chiefs

Jan 24, 2008

CENTRAL bank governors of the East African Community (EAC) have called for a quick and effective resolution of the political crisis in Kenya.

By Sylvia Juuko

CENTRAL bank governors of the East African Community (EAC) have called for a quick and effective resolution of the political crisis in Kenya.

They say the impasse has negatively impacted on the region’s economy.

The communication was carried in a joint statement they issued at the end of the EAC monetary affairs committee meeting held at Imperial Royale Hotel in Kampala yesterday.

The governors of the central banks of Uganda, Rwanda, Kenya, Tanzania and Burundi are meeting to discuss the fast-tracking of the EAC monetary union by 2012.

The governors are Tumusiime Mutebile (Uganda), Njuguna Ndungu (Kenya), Benno Ndulu (Tanzania), Francois Kanimba (Rwanda) and Gaspard Sindayigaya (Burundi).

The secretary general of the EAC, Juma Mwapachu, who attended the meeting, said the bank chiefs were deeply concerned by the post-election violence and loss of lives in Kenya.

“The economic dislocation that has so far emerged and which could deepen, if return to normalcy is delayed, is most worrisome to all five partner states.”

He said any disruption in the movement of goods and services had an adverse economic impact.

“There are serious economic distortions in the region. The fundamental question is the lessons we draw from the situation.”

Mwapachu said fuel prices in Uganda had more than doubled at the height of the crisis and movement of raw materials, exports and imports affected.

He stated that Tanzania was facing capacity challenges as ships were being diverted from the port of Mombasa to Dar-es-Salaam.

“Tanzania doesn’t have capacity to handle the extra ships. The railway is dilapidated, which means goods to Uganda from Dar-es-Salaam to Mwanza go by the road to Mutukula, causing delays.”

He called for the rehabilitation of infrastructure within the region to avoid the current disruptions.

Ndungu called for the strengthening of institutions that promote democracy.

Fast-tracking of the monetary union is in line with a directive of EAC heads of state passed during their 6th extra-ordinary summit held in Arusha in August last year.

The governors said their banks had laid a foundation for the formation of the monetary union.

They asked the EAC secretariat to review the preparedness of each member state for the project.

“The study, which must be completed within 6 months, will give an independent assessment of progress towards macro-economic convergence,” said the statement.

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