Speaking at the launch of the East African Bankers Association (EABA), KBA Chief Executive Officer Habil Olaka said all eyes were now on the Central Bank’s Monetary Policy Committee to determine direction of interest rates.
“When inflation starts coming down, the first indicator will be the CBR (Central Bank Rate) because when it declines, there will be credit and liquidity available in the market causing interest rates to lower,” he added.
Olaka was joined by CEOs from the national bankers associations of the East African Community (EAC), Emmanuel Turyamuhika Kikoni of Uganda, Pascal Kamuzora of Tanzania, Jacqueline Mugwaneza of Rwanda and Genevieve Buzungu of Burundi who all signed a Memorandum of Understanding to form the EABA.
“We realised the need to work together to more effectively play a role in advocacy issues influencing policy formation at the regional level in the interest of its customers and the banking industry,” he said.
The EABA will attempt to harmonise regional systems so that regulatory arbitrage is eliminated to create a level playing field for all players who wish to utilise the wider regional market.
“Countries who are part of the EAC will be able to use the successes and shortcomings that the other members have experienced, in order to make their own banking methods better by implementing or avoiding practices used in the past,” he emphasised.
Olaka also identified the issue of a single currency in the region as a major goal for the new association.
“The single currency is one of our targets as an association, in terms of contributing to the framework put in place to allow for a monetary union in the region in the shortest time possible,” he said.
The EABA has structured a secretariat initially to be housed by one of the EAC members and the management office positions will be held by the national associations on a rotational basis.
“Kenya has offered to house the Secretariat for the first three years,” he revealed.