The East African Community (EAC) is poised to accelerate regional digital integration with the development of an EAC Payment Systems Masterplan.
The Masterplan is set to harmonise legal, regulatory and oversight frameworks to promote a conducive cross-border payment ecosystem in 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,” says Annette Ssemuwemba, EAC deputy secretary general in charge of customs, trade and monetary affairs.
The EAC region has seen rapid growth in digital payments, with mobile money transactions surging. However, challenges persist, including high transaction costs, limited interoperability, and regulatory disparities across partner states. Cross-border payments remain costly, averaging 7% of the transaction value, well above the global average target of 1% for retail payments and 3% for remittances.
While the EAC Treaty has provisions for harmonisation of legal frameworks, the absence of an enforceable regional payments law and regulatory framework across all partner states remains a challenge. Some have enacted national legislation to align with EAC commitments, but others have not, creating a legal gap that hinders uniform enforcement of cross-border payment regulations.
Ssemuwemba believes that despite these hurdles, opportunities exist. “The region's growing digital economy, expanding internet penetration, currently at 28% (meaningful connectivity - a level of internet access that allows people to have a safe, productive and enriching online experience at an affordable cost), and innovative financial technologies are paving the way for an inclusive and seamless payment ecosystem.”
A key initiative expected in the EAC Payments Masterplan is the development of a mutual recognition framework for licensing Payment Service Providers, which will facilitate their operations across borders without unnecessary regulatory barriers. To support digital financial services, a harmonised regulatory framework for intraregional mobile money and e-wallet transactions is also being developed, promoting interoperability and security.
To further strengthen cross-border payments, principles for currency acceptability and convertibility will be introduced, addressing currency-related challenges and fostering better pricing mechanisms.
To develop infrastructure that enables instant cross-border wholesale and retail payments, the Masterplan will identify infrastructure needs for instant cross-border payments to ensure access, speed, cost efficiency, transparency, inclusivity and safety as well as sustainability of the payment systems.
By integrating national payment systems and enabling instant retail and wholesale payments across the region, individuals and businesses will benefit from lower transfer costs, reduced reliance on costly intermediaries and greater financial inclusion. Mobile money users, small traders and online businesses will experience seamless transactions across borders, thereby enhancing trade and economic opportunities, says Ssemuwemba.
For businesses and consumers, the Masterplan will provide a secure and efficient payment ecosystem that supports economic growth. With harmonised regulations and stronger oversight, the risks of fraud and transaction delays will be minimised, boosting confidence in digital payments.
Additionally, the ability to settle transactions in local currencies will reduce foreign exchange costs, making everyday cross-border transactions – from remittances to e-commerce – more affordable and convenient for EAC citizens.
