Thursday,15th September, 2022: Speaking during the EABC- EAC EU AfricaRise Webinar on Harmonization of Payment System in the EAC, Mr. John Bosco Kalisa called for full interoperability of mobile money networks and cross-border transaction/ payments at the EAC level. He urged Governments of EAC Partner States to pursue initiatives to reduce currency exchange fees during transaction as an interim solution in the absence of a single currency.
He expounded that Tanzania’s mobile money market reached a value of USD 54.5 Billion in 2021 and Rwanda recorded USD.10 billion in mobile transactions in 2021. He stated that high transaction costs and currency exchange rate volatility set back the growth of intra-EAC trade.
According to the World Bank’s Remittance Price Worldwide Q4/2020, it costs an average of 6.5 percent to send USD 200 globally, 4.88 percent to South Asia, 6.58 percent to the Middle East and North Africa, and 8.19 percent to sub-Saharan Africa.
Mr. Paul Baker from Africa RISE said “Integrated payment systems are crucial for the realization of the East African Monetary Union, as they facilitate the payments for goods and services, the cross-border flows of capital as well as remittances within the region.”
He expounded that the East Africa Single Digital Market (SDM) supports the region to “become a more deeply integrated and dynamic digital investment, innovation, and growth hub.” Digital payments are one of the core elements for the single online market layer to enable East Africa to pay for domestic and international services.
On her part, Ms. Mukashema Adeline, Senior Principle Payment System Department in the National Bank of Rwanda, said Rwanda joined the East African Payment and Settlement System in 2014 which has enabled banks and telcos to send money across the region and supports international Automated Teller Machine (ATM) cards.
Mr. James Bukulu, Deputy Director – National Payment Systems Bank of Uganda said “Uganda is in the process of deploying a national switch and the EAC bloc should come up with a similar initiative to support mobile transactions at regional and international level”
Mr. Ralph LIGALAMA, Head of Payment Systems, Equity Bank –Tanzania said banks are collaborating with FinTechs to facilitate payments and trade. He stated a single currency for the EAC ease cross border transactions.
Mr. Sebabi Bosco Deputy CEO, Pan-African Payment and Settlement System (PAPSS) said PAPSS – enables the efficient flow of money securely across African borders, minimising risk and contributing to financial integration across the regions.
The East African Payment and Settlement Systems (EAPS) allows processing and settlement of transactions in local currencies, there is low uptake of the system among the EAC Partner States due to low volumes of intra-regional trade and stiff competition from banks with established correspondent bank relationships. Regional currencies should be freely convertible to enable transactions without having to convert national currencies into dollars to enhance regional trade and lower transaction costs.
The Webinar on Harmonization of Payment System in the EAC convened over 100 Senior Government officials from Afrexim Bank, East African Community, Financial Services Providers and Experts as well as traders.
The challenges to harmonization of cross-border payments include Regulatory and infrastructure gaps such as payment settlement workarounds, high compliance costs, low trade of certain currencies, requirements for pre-funding accounts, bloated payment value chain and taxation.
The players have urged EAC partner states to review and update laws and regulations for payment systems including those related to data protection and e-payment, enhance Know Your Customer Information; payment data collection; and compilation to contribute to the transparency & integrity of the regional payment systems, strengthern inclusivity through financial and digital training programmes, improve payment refund systems; data protection and cybersecurity; authentication seal for e-commerce platforms; establish central banks digital currencies and embark on use of block chain technology to secure supply chains and products from ports (air, sea, land) to markets and clients.
The Webinar on Harmonization of Payment System in the EAC was moderated by Ms. Waturi Matu, Senior Advisor on Private Sector Development and Mr. Nathan Gashayija Private Sector Development Advisor -Africa-RISE.