World Bank Grants US$16m for EAC Financial Services Market
By Henry Neondo
The World Bank has signed a grant worth US$ 16 million to help support a project meant to transform financial services in the East African Community.
The Project to be implemented in two phases over a nine year period will support EAC efforts towards building a single financial services market for the region. The $16 million grant which will cater for the first phase of the project (EAC- FSDRP I) which was approved by the World Bank Board on 31 January this year.
According to the EAC Deputy Secretary General in charge of Planning and Infrastructure, Mr. Alloys Mutabingwa, the harmonization of the financial services sector will play a key role in unlocking some of the benefits of the Common Market by removing barriers to the free movement of capital across the EAC region, as provided for by the Common Market Protocol.
The project has six components, namely; Financial Inclusion and Strengthening Market Participants; Harmonization of Financial Laws and Regulations; Mutual Recognition of Supervisory Agencies; Integration of Financial Market Infrastructure; Development of a Regional Bond Market; and Capacity Building. Phase 1 of the project commences this year and will end in the first quarter of 2014.
World Bank representative Mr McIntire commended EAC for what he described as the “excellent work” it is doing, while EAC Secretary General Amb. Juma Mwapachu thanked the World Bank for “seeing the importance of this project”, and noted that a strong regional financial sector is needed to underpin an effective common market.
He said through the project ordinary East Africans stand to gain by trading on a regional stock exchange, as the FSDRP envisions a single East African Stock Exchange among other benefits. In addition, by supporting the development of the regional financial services sector the project benefits EAC’s work towards the establishment of a monetary union and single currency.
The EAC Secretariat working with the World Bank prepared the EAC – FSDRP I. The objective of the EAC FSDRP is to support the establishment of a single financial market among EAC Partner States with a view to making a wide range of financial products and services available to all, at competitive prices.
This objective will be achieved through two back-to-back projects over a 9-year period. Financial Sector Development and Regionalization Project I (FSDRP I) will cover Q1-2011 to Q1-2014, and FSDRP II will run from 2014 to 2019.
The Project is crucial as it is part of the implementation of the Common Market Protocol and covers all the components of the financial sector regionalization plan which are: Financial inclusion and strengthening market participants, harmonisation of financial laws and regulations, and mutual recognition of supervisory agencies.
It will further help in the integration of financial market infrastructure, development of the regional bond market, capacity building in both EAC Secretariat and regulatory bodies in EAC Partner States.
The agreement to fund the EAC Financial Sector Development & Regionalization Project was initialed by Secretary General Amb. Juma Mwapachu on behalf of the EAC and Country Director for Tanzania, Uganda and Burundi Mr. John Murray McIntire, on behalf of the World Bank.
Present at the signing ceremony were the EAC Deputy Secretary General in charge of Planning and Infrastructure, Mr. Alloys Mutabingwa, the Counsel to the Community, Hon. Wilbert Kaahwa, and the Director for Planning, Mr. Tharcisse Kadede.