The East African Community is taking a significant step towards revolutionizing cross-border payments with the validation of the regional cross-Border Payment System Masterplan.
This milestone, attained during the EAC Regional Payment Systems Steering Committee meeting recently held in Mombasa, Kenya, aims to enhance the speed, security, affordability and integration of payment systems across the region.
The Chairperson of the Steering Committee, Michael Eganza, who is the Director of Banking and Payment Services at the Central Bank of Kenya, said that the validation of the Masterplan was a significant event towards a more integrated and efficient East African payments landscape.
“By implementing the Masterplan and the proposed initiatives, we are laying the groundwork for a seamless, cost-effective and inclusive financial ecosystem,” he added.
The EAC Director of PlanningAime Uwase, emphasized the importance of the initiative, saying that an efficient and reliable cross-border payment system was vital for regional economic growth and financial inclusion.
“The successful implementation of the EAC Cross-Border Payment System Masterplan will enhance trade, investment, and economic collaboration across the region,” said Mr. Uwase.
The Masterplan was developed through extensive consultations with the Partner States’ Central Banks and envisions a future where East Africans can conduct cross-border transactions with ease, fostering deeper economic integration and financial inclusion. Its mission is to implement a secure, efficient, and interoperable payments framework that aligns with the objectives of the EAC Monetary Union.
The Masterplan tackles key obstacles such as fragmented regulations, high transaction costs, and limited interoperability by outlining twenty targeted initiatives.
Draft identifies several critical challenges, including fragmented regulatory frameworks, limited interoperability between national and regional payment systems, high transaction costs, slow settlement processes, gaps in financial inclusion, and weak consumer protection mechanisms.
Additionally, challenges in cross-border data-sharing and risk management hinder the efficiency of payments across Partner States.
By addressing these issues, the Masterplan seeks to create a more seamless and integrated payments ecosystem that will enhance trade, investment, and economic growth across the region.
Notably, the roadmap aligns with global best practices, including the implementation of the international standards organization (ISO 20022) as a benchmark messaging protocol to facilitate electronic data exchange between financial institutions.
The Masterplan is proposing the exploration of Central Bank Digital Currencies (CBDCs), digital forms of a country’s fiat currency issued and regulated by the central bank, for regional transactions.
Targeted initiatives such as the development of a mutual recognition framework for cross-border Payment Service Provider (PSP) licensing and a harmonized regulatory framework for mobile money and e-wallet transactions are also included.
The Masterplan focuses on enhancing interoperability through a regional instant retail payment switch, fostering public-private collaboration via a regional payments system forum, and strengthening consumer protection measures.
Additionally, it explores the adoption of emerging technologies such as AI and cloud computing to further modernize cross-border payments across the EAC region.
As the Masterplan identifies various targeted initiatives, the Partner States are in agreement that successful implementation requires a phased approach, ensuring that each initiative is implemented efficiently while adapting to the evolving financial and technological landscape.
In this regard, the Partner States have recommended a roadmap that provides a clear timeline for key milestones, enabling stakeholders to track progress and make necessary adjustments to optimise results.
Each phase is designed to progressively enhance the region’s payment ecosystem, fostering interoperability and financial inclusion while reducing transaction costs and inefficiencies.
The rollout of the Masterplan is anticipated to occur in three (3) phases; whereby in the Short-term (1–2 years) it will address Regulatory harmonisation, foundational infrastructure upgrades, and capacity-building initiatives; Medium-term (3–5 years) it will ensure full interoperability of Partner States’ payment systems and operationalisation of the regional instant retail switch; and Long-term (beyond 5 years) it is set to enhance deeper regional integration, alignment with global payment networks, and adoption of emerging financial technologies.
To further support the implementation of the Masterplan, the Eastern Africa Regional Digital Integration Project (EARDIP) is set to play a crucial role.
Funded by the World Bank, the EARDIP is set to advance digital market integration in Eastern Africa by enhancing cross-border broadband connectivity, data flows and digital trade.
Throught Online Market Development and Integration component, the EARDIP aims to enhance the regional online market by addressing barriers to cross-border trade and payments while investing in key digital enablers.
The core objective is to improve interoperability between digital payment systems across the region, ensuring seamless cross-border transactions for goods and services.
By fostering greater connectivity and financial inclusion, EARDIP is expected to contribute significantly to the success of the Masterplan, promoting a more integrated and efficient digital payments ecosystem in East Africa.
With strong backing from policymakers and development partners, the EAC Payment Systems Masterplan is set to drive economic growth, enhance financial inclusion, and position East Africa as a leader in cross-border payment innovation.