The East African Community (EAC) is making significant strides toward accelerating regional digital integration with the development of the EAC Payment Systems Masterplan. The plan aims to harmonize legal, regulatory, and oversight frameworks to foster a seamless cross-border payment ecosystem, which will enable faster, cheaper, and more transparent trade and financial activities across the region.
During a meeting of the EAC Regional Payments System Steering Committee held in Entebbe, Uganda, the EAC Deputy Secretary General in charge of Customs, Trade and Monetary Affairs, Ms. Annette Ssemuwemba, emphasized the importance of efficient and reliable payment systems in driving economic integration within the region.
“The EAC Payment Systems Masterplan will be a turning point, making cross-border payments faster, safer, cheaper, and more transparent. This initiative is crucial for unlocking the region’s trade and financial potential,” said Ms. Ssemuwemba.
She further reiterated the EAC’s commitment to integrating cross-border payments in order to boost trade and financial inclusion across the region. Despite the rapid growth of digital payments and the surge in mobile money transactions, challenges such as high transaction costs, limited interoperability, and regulatory discrepancies across EAC Partner States continue to hinder progress. The cost of cross-border payments remains high, averaging 7% of the transaction value, well above the global targets of 1% for retail payments and 3% for remittances.
“While the EAC Treaty includes provisions for harmonizing legal frameworks, the absence of an enforceable regional payments law and regulatory framework across all Partner States remains a challenge,” Ms. Ssemuwemba explained. She pointed out that while some Partner States have enacted national laws to align with EAC commitments, others have not, creating a legal gap that undermines the enforcement of consistent cross-border payment regulations.
However, there are ample opportunities for growth. The region’s expanding digital economy, increased internet penetration (currently at 28%), and the rise of innovative financial technologies are paving the way for a more integrated and efficient payment ecosystem.
A key component of the EAC Payment Systems Masterplan is the development of a mutual recognition framework for licensing Payment Service Providers (PSPs). This framework will facilitate PSPs’ operations across borders without unnecessary regulatory barriers. Additionally, the Masterplan will establish a harmonized regulatory framework for mobile money and e-wallet transactions across the region, promoting interoperability and enhancing security.
To address currency-related challenges, the Masterplan will introduce principles for currency acceptability and convertibility, improving pricing mechanisms and streamlining currency exchange for cross-border payments. The Masterplan will also identify infrastructure requirements for instant cross-border payments, ensuring access, speed, cost efficiency, transparency, inclusivity, safety, and sustainability.
The EAC Regional Payments System Steering Committee, consisting of experts from the central banks of EAC Partner States, development partners such as GIZ, Trade Mark Africa (TMA), and the World Bank, as well as specialists from the EAC Secretariat, met to validate the Draft Payment Systems Masterplan. This collaborative meeting aimed to consolidate ideas and propose priority initiatives for implementation, ultimately ensuring that cross-border payments within the region become faster, safer, cheaper, and more integrated.
By integrating national payment systems and enabling instant retail and wholesale payments across the region, the Masterplan is expected to benefit individuals and businesses alike. Lower transfer costs, reduced reliance on expensive intermediaries, and greater financial inclusion will be key outcomes. Mobile money users, small traders, and online businesses will experience seamless transactions across borders, thereby enhancing trade and economic opportunities.
For businesses and consumers, the Masterplan promises a secure and efficient payment ecosystem that will support economic growth. With harmonized regulations and strengthened oversight, the risks of fraud and transaction delays will be minimized, boosting confidence in digital payments. Additionally, allowing the settlement of transactions in local currencies will help reduce foreign exchange costs, making cross-border transactions—from remittances to e-commerce—more affordable and convenient for EAC citizens.
About EARDIP:
The Eastern Africa Regional Digital Integration Project (EARDIP) plays a key role in enhancing the EAC’s digital payment landscape. By supporting the harmonization of legal and regulatory frameworks, promoting interoperability, and strengthening digital infrastructure, EARDIP aims to reduce transaction costs, improve efficiency, and foster financial inclusion. This project is integral to the broader goal of creating a unified regional payment ecosystem that supports the objectives of the EAC Monetary Union.
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