The East African Business Council (EABC) Executive Director John Kalisa has called for full interoperability of mobile money networks and cross-border transaction/ payments at the East African Community (EAC) level.
Speaking during the EABC- EAC EU AfricaRise Webinar on Harmonization of Payment System in the EAC, Kalisa 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.
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.
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”
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.
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.