Members of the East African Legislative Assembly (EALA) will this week begin discussion and debate on the EAC Budget for the next financial year during their current session here.

The EAC budget proposal speech, in which over $120 million is set down in estimates will be delivered by the current Chair of the EAC Council of Ministers, Phyllis J. Kandie of Kenya.

The EAC budget, which is largely funded by development partners contributing 70%, according to a statement, includes the consolidation of the Common Market, completion of negotiations and movement towards the East African Monetary Union.

Other projects that have to be paid for are investment promotion and private sector development, among others.

In January, the EALA approved a supplementary budget giving the EAC a go-ahead to expend an additional $ 2.1million for the Financial Year 2013/14 to meet its programmes.

‘The supplementary budget was earmarked for agriculture, trade and customs, the EAC Financial Management Harmonization Project and the strengthening of the East and Southern Africa-Indian Ocean (ESA-IO) Maritime Security Project,’ the Secretariat statement reads in part.

Last year, the EALA approved a budget amounting to $131 million to finance the bloc’s activities for the current fiscal year that ends next month.

Key reports are to be tabled to the EALA’s two week session include the report of the Committee on Agriculture, Tourism and Natural Resources on the 2nd Parliamentarians workshop on Climate Change and that of the Committee on Communication, Trade and Investments on the Single Customs Territory.

In addition, members of EALA will also deliberate on the Report of the Committee on Accounts on Internal Audit Systems and the Report of the Committee on General Purpose on the EAC Annual Report for the period 2011/12.

Meanwhile, the East Africa Payment System (EAPS) was last week officially launched. It is intended to increase and ease trade across common borders.

EAPS will allow business people in Tanzania, Uganda and Kenya receive payments in local currencies and in real time.

Central bank governors drawn from Kenya, Uganda and Tanzania were in Arusha to set things moving.

“Today marks yet another important milestone in the implementation of Article 15 of the East African Monetary Union Protocol Payment and Settlement System’’, noted the EAC Deputy SG, and reiterated that this is a requirement for the development and implementation of secure, efficient, reliable and integrated payment and settlement system to ensure efficient flow of financial transactions within the Monetary Union framework.

“The modernization of the system is good as it will help in deepening integration in the region,” the EAC Deputy Secretary General Enos Bukuku said.

The interconnection in the region will cut the cost of cross-border money transfer and spur the region’s trade. Under the system, transactions are settled in any of the EAC local currencies, reducing the cost and risk of transferring money.

EAPS is a funds transfer system that will transfer money on a gross basis, with the ultimate plan the creation of monetary union within East Africa in the next 10 years. This is also expected to increase intra-regional trade and cross border movement of labour.

By linking the real time gross settlement (RTGS) system used in Tanzania, Uganda and Kenya, large sums of money can be transacted across the three borders seamlessly. Rwanda and Burundi are also expected to join the system, once they set up the RTGS.

The interconnection in the region will cut the cost of cross-border money transfer and spur the region’s trade. Under the system, transactions are settled in any of the EAC local currencies, reducing the cost and risk of transferring money.

The EAC Deputy Secretary General in charge of Planning and Infrastructure, Dr. Enos Bukuku, speaking during the launching ceremony, said Financial sector integration is yet another crucial step that will make the EAC region a more viable destination for both foreign and domestic investment by bolstering the liquidity of the region’s capital markets and creating financing avenues for investors and issuers.

Central Bank Of Kenya (CBK) governor Prof Njuguna Ndungu said “It sends and receives cross border payments in the region’s currencies, that is the Kenya shilling, Tanzania shilling and Uganda shilling, from any commercial bank in the three East African countries on a real time basis for the region’s business community,” said Ndungu.

The system will facilitate real time transfer of large value payments across borders and enhance safety through the use of the infrastructure. All commercial banks in Tanzania, Uganda and Kenya are key actors in the system and will offer same day settlement of funds and are expected to help reduce non-tariff barriers such as high transaction fees on intra-EAC wire transfers, foreign currency fluctuations and capital account restrictions.

Source: The East African

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