The East African Community (EAC) and the World Bank on Monday signed a grant agreement worth $16 million to support a project aimed at transforming the EAC’s financial services sector.
The agreement, paving way for the disbursement of the EAC Financial Sector Development & Regionalization Project (FSDRP) was signed between EAC Secretary General, Juma Mwapachu, and John Murray McIntire, the World Bank Director for Tanzania, Uganda and Burundi.
In a statement released by the bloc’s Secretariat, 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.
Speaking at the signing in Arusha-Tanzania, Mwapachu hailed the World Bank for supporting the project and noted that a strong regional financial sector is needed to underpin an effective common market.
He added that 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.
“By supporting the development of the regional financial services sector, the project benefits EAC’s activities towards the establishment of a monetary union and single currency,” he stressed.
According to the EAC Deputy chief in charge of Planning and Infrastructure, Alloys Mutabingwa, the harmonization of the financial services sector will play a key role in unlocking some of the benefits of the Common Market such as removing barriers to the free movement of capital across the EAC region, as provided for by the Common Market Protocol.
The $16 million grant that will cater for the first phase of the project (EAC- FSDRP 1) was approved by the World Bank Board on January 31 this year.
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.
FSDRP 1 commences this year and will end in the first quarter of 2014 while FSDRP II will run from 2014 to 2019.