The 28th Ordinary Meeting of the EAC Monetary Affairs Committee (MAC) approved the EAC Cross-border Payment System Masterplan, a transformative initiative aimed at enhancing financial integration, promoting regional trade and accelerating the region’s journey toward a seamless, efficient, and secure payment ecosystem.
The MAC Meeting, constituted by the Governors of the EAC Partner States’ Central Banks, reviewed progress made in the implementation of the roadmap towards realisation of a single currency by 2031.
The Governors further approved the Masterplan in an effort to ensure an inclusive, secure, efficient and interoperable cross-border payments environment to support the EAC Monetary Union objectives and in alignment with EAC’s wider vision for economic integration.
The EAC Cross-border Payment System Masterplan seeks to establish an integrated payments environment across the Partner States by enhancing the efficiency, speed, and security of cross-border financial transactions, promoting the use of local currencies, deepening financial markets and digital inclusion and supporting the region’s overall economic development through harmonised digital financial infrastructure.
The Masterplan is built around four (4) strategic pillars:
- Policy and Regulatory Harmonisation: Establishing harmonised regulatory environments to enhance compliance, reduce risks, and promote interoperability among payment service providers (PSPs).
- Infrastructure Development and Modernisation: Strengthening and modernising payment systems to facilitate faster, more cost-effective transactions, including the expansion and enhancement of the East African Payment System (EAPS) and the development of a regional instant retail payment switching mechanism.
- Financial Market Deepening: Ensuring individuals, businesses and financial institutions across the Partner States have equitable access to cross-border payment systems.
- Capacity Building: Developing technical expertise, regulatory capabilities, and financial literacy to support the modernisation of payment systems and ensure their sustainability.
The implementation of the Masterplan is expected to significantly reduce the cost and time of cross-border payments, making transactions faster and more affordable for businesses and individuals. This will stimulate intra-regional trade and investment by easing financial flows across Partner States. At the same time, the Masterplan will promote greater financial inclusion by expanding access to secure, convenient, and affordable digital financial services, especially for underserved populations.
In the long-run, the Masterplan will also strengthen the region’s economic resilience by encouraging the use of local currencies and reducing dependence on foreign intermediaries. It will also enhance consumer trust through improved regulatory oversight and harmonised standards for digital finance.
Notably, the Masterplan lays the groundwork for future innovations, such as a regional digital currency or Central Bank Digital Currencies (CBDCs), that can further support a modern, integrated, and inclusive East African financial ecosystem.
The Masterplan has identified a set of strategic initiatives designed to ensure the development of an EAC-wide, future-proof payment ecosystem that is faster, safer, cheaper, more transparent, and highly integrated. These initiatives provide a clear roadmap for building a robust regional system that supports the needs of governments, businesses, and citizens in an increasingly digital economy.
The implementation of the Masterplan will be significantly supported by the Eastern Africa Regional Digital Integration Project (EARDIP), a flagship regional initiative financed by the World Bank and coordinated by the EAC Secretariat. EARDIP will complement and reinforce other ongoing regional initiatives aimed at realising the Masterplan by addressing the core enablers of a modern and integrated regional payment ecosystem.
The Project will support the development of cross-border connectivity and expand backbone and last-mile connectivity to rural and remote communities to facilitate real-time gross settlement, instant payments, and cross-border mobile money interoperability thereby ensuring transactions are faster, safer, and more affordable across Partner States.
In addition, EARDIP will drive the harmonisation of regulatory frameworks and the adoption of common standards for digital financial services, which are essential for enabling interoperability and trust in regional transactions.
The project will also enhance cybersecurity and data protection mechanisms to safeguard digital financial systems, and will invest in technical assistance and capacity building to empower institutions in Partner States to effectively implement and sustain payment system reforms.
Once implemented, the EAC Cross-border Payment System Masterplan will significantly reduce the cost and time associated with cross-border transactions, making regional payments more efficient and accessible.
By enabling seamless and secure financial flows, the Masterplan will directly support intra-regional trade and investment while expanding financial inclusion through the provision of affordable and accessible digital payment solutions for individuals and businesses alike.
In addition, the Masterplan will foster innovation and competition within the financial sector by creating an enabling environment for new players and technologies to thrive. It will also lay the groundwork for future regional digital financial tools, positioning the region at the forefront of digital financial transformation.
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