EAC Central Banks urged to leverage technology

ARUSHA: CENTRAL Banks in East African Community member states have been urged to adopt advanced technologies to streamline cross-border payments within the EAC Common Market.

EAC Secretary General, Ms Veronica Nduva made this call during the launch of the Investment and Business Environment Improvement Reports and Investment Management Tools in Arusha recently.

Ms Nduva highlighted several challenges affecting the uptake of the East African Payments System (EAPS), including limited capacity, lack of interoperability, communication gaps between central banks and stakeholders, concerns over online security, protectionist policies by central banks and overlapping membership in various regional payment systems.

Launched in 2014, EAPS aims to enhance the efficiency and safety of payments and settlements within the EAC region.

Ms Nduva emphasised the importance of central banks in developing an efficient payments and settlements system Continues on Page 3 Continues on Page 3 and building public confidence in new technology driven payment systems.

“An effective and reliable cross-border payment system is crucial for regional economic integration.

This is why the East African Monetory Union (EAMU) Protocol mandates EAC partner states to harmonise and integrate their payment systems as they transition to a single currency,” Ms. Nduva said.

She commended both public and private sector efforts over the past decade to modernise and integrate payment systems, noting contributions from development partners, including the European Union (EU), UNDP, USAID, JICA and Trademark Africa.

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Ms. Nduva acknowledged the significant changes driven by new technologies in the payment system landscape. “Digital financial services have made payments more efficient, less expensive and inclusive.

However, progress on cross-border payments remains slow.

Interoperability is still lacking, and the uptake of EAPS has been low.

Most banks rely on foreign correspondent banks for regional payments,” she explained.

She urged EAC partner states to build on domestic successes to achieve regional interoperability of digital payment systems.

“Our goal is to make cross-border payments faster, safer, cheaper and more transparent to facilitate trade and financial inclusion in the region through policy harmonisation, infrastructure enhancement and capacity building,” she added.

At the forum, Senior Programme Officer (East Africa) at the Bill and Melinda Gates Foundation, Ms. Amani M’Bale highlighted the importance of payment systems in enhancing financial inclusion and addressing poverty.

She committed the Foundation’s support for national and regional cross border payment systems.

Ms. Allen Asiimwe, Chief of Programmes and Deputy CEO of Trademark Africa (TMA), noted that cross-border traders often lose money due to currency exchange issues.

“With over 70 per cent of our trade being informal, it is crucial to improve our payment systems,” she said.