Towards the East African Monetary Union: Constitutional Issues for Kenya

• Jurisdiction: South Africa
• Date: 24 May 2019
• Citation: (2015) 2(1) Journal of Comparative Law in Africa 74
• Pages: 74-100
• Published date: 24 May 2019
• Author: Shiundu Joseph Lutta

TOWARDS THE EASTAFRICAN MONETARY

UNION: CONSTITUTIONAL ISSUES FOR KENYA

SHIUNDU JOSEPH LUTTA

Advocate of the High Court of Kenya and Certif‌ied Public Secretary of Kenya*

Generally, countries enter into monetary union agreementsto promote economic integration.

In turn, this economic integration is meant to spur equitable development among the

member states. Aside from the potential economic gains, monetary unions raise a myriad

of serious issues that are constitutional and political in nature. This is because this practice

transfers sovereign power of the people fromthe nation to a supranational organisation. As

such, this shift in authority alters the framework of a country’s governance system. This

legal quandary forms the spine of this article. It seeks to demystify these constitutional

issues from the perspective of Kenya and the prospective East African Monetary Union

(EAMU). In addition, it provides a comparative study of the practice in Germany within

the European Union (EU) and lessons it offers to Kenya in manoeuvring this legal

dilemma.

[Généralement, les pays concluent des accords de l’union monétaire à promouvoir

l’intégration économique. A son tour, cette intégration économique est destiné à stimuler le

développement équitable entre les Etats membres. Mis à part les gains économiques

potentiels, les unions monétaires soulèvent une multitude de questions graves qui sont

constitutionnel et politique en nature. C’est parce qu’il transfère la puissance souveraine

du peuple de la nation à une organisation supranationale. En tant que tel, ce transfert

d’autorité modif‌ie le cadre du système de gouvernance d’un pays. Ce dilemme juridique

constitue la colonne vertébrale de ce document. Il vise à démystif‌ier ces questions

constitutionnelles dans la perspective de Kenya et la prospective de l’Union monétaire de

l’Afrique de l’Est (EAMU). En outre, il donne une étude comparative de la pratique de

l’Allemagne au sein de l’Union européenne (UE) et les enseignements qu’elle offre au

Kenya en manoeuvrant ce dilemme juridique.]

Keywords: constitution, Kenya, monetary union, sovereign

Mots-clés: Kenya, la Constitution, monétaires de l’union, souverains

Abbreviations: CBK Central Bank of Kenya

EAC East African Community

EACA East African Court of Appeal

EACB East African Central Bank

EACM East African Common Market

EACU East African Customs Union

EAMI East African Monetary Institute

EAMU EastAfrican Monetary Union

ECB European Central Bank

EEC European Economic Union

ESCB European System of Central Banks

ESM European Stability Mechanism

EU European Union

* LLB Hons (Moi University), Diploma (Kenya School of Law), email joelutta@

gmail.com, P O Box 1447 Eldoret, Kenya 80100.

74

(2015) 2(1) Journal of Comparative Law in Africa 74

© Juta and Company (Pty) Ltd

GCB German Central Bank (Deustche Bundesbank)

OMT Outright Monetary Transaction

Introduction

Generally, countries form monetary unions to foster economic growth and

development. This is because a unif‌ied monetary system streamlines regional

f‌low of capital and commerce. As such, most of the contentious issues are

usually f‌inancial and economic in nature. However, there is another angle to

this quandary. This is the viewpoint that a monetary union is a supranational

organisation. Therefore, when a country gains membership, it surrenders

part of its sovereign authority. This is because sovereign power vests with the

people, therefore, it is fundamental that they give their approval before it is

transferred from the state to the union. Subsequently, after a state becomes

part of such an organisation, the sovereign power of the people is crystallised

into the union. This crystallisation creates a novel, but peculiar, bond

between these two institutions.

Nonetheless, the focal point of this article is the case of Kenya and the

prospective East Africa Monetary Union (hereinafter ‘EAMU’). After the

promulgation of the new Kenyan Constitution on 27 August 2010, Kenya

transformed from an imperial executive to a constitutional democracy. This

paradigm shift altered the nature of the relationship between Kenya and

supranational organisations because the interface between these two is

subjected to a higher threshold of constitutionality. As such, the execution of

the EAMU (Kampala) Protocol leaves Kenya on the verge of serious

constitutional issues. This chain of events is what forms the crux of this

article. It seeks to demystify the constitutional concerns that may emerge

before and after Kenya joins the EAMU.

This article is divided into f‌ive parts. The f‌irst part gives a general

introduction into monetary unions and their constitutional issues. The

second part expounds the Kampala Protocol and the nature of the prospec-

tive EAMU. The third part addresses constitutional transformation in Kenya

and, more specif‌ically, the issues that touch on the EAMU. The fourth part is

an in-depth study of the constitutional issues that arise between Kenya and

the EAMU. The f‌ifth part offers a comparative study of Germany and the

European Economic Community (hereinafter ‘EEC’) (later the European

Union or EU). Finally, the sixth part suggests recommendations on dealing

with these constitutional issues.

Part One: Monetary Unions

Introduction

Integration of states is essential in enhancing their socio-economic progress

because they form a large pool of resources that fosters both economic

growth and development. Additionally, this integration may go a step further

TOWARDS THE EAST AFRICAN MONETARY UNION 75

© Juta and Company (Pty) Ltd