In order to ease trade in East African countries, member states are working on linking the regional electronic payment system to other payment solutions in Africa.
The e-payment is designed to alleviate payment problems following the launch of the African Continent Free Trade Area (AfCFTA).
The performance of the East African Payment System (EAPS), which was launched in May 2014, has been hampered by the reluctance of member countries to trade in each other’s currency, leaving Kenya to control over 98 per cent of the transactions through the system.
EAC central banks are now exploring ways of transforming the system by linking it with other payment solutions in Africa to enable seamless transfer of cash across the continent at both retail and wholesale levels.
Bank of Uganda’s deputy governor Dr Louis Kasekende said the move will help boost intra-Africa trade and support the growth of regional firms.
Currently, Kenya dominates transactions in the EAPS, which allows citizens of member countries to make and receive payments in regional currencies — the Kenyan shilling, Ugandan shilling, Tanzanian shilling, Rwandan franc and Burundian franc.
During the 2017/2018 financial year, Kenyans accounted for over 98 per cent of the transactions in this system amounting to $ 2.37 billion out of $2.41 billion, with a paltry $40 million being transacted by Uganda, Rwanda, Tanzania and Burundi.
South Sudan is yet to join the system, which links the respective real time gross settlements (RTGS) systems of Kenya, Uganda, Tanzania, Rwanda and Burundi.
The operationalisation of the EAPS was largely meant to enhance regional currency convertibility.
The agreement to make all regional currencies tradable was also signed in 2014 by the EAC member states with a view to promoting intra-regional trade and as part of the preparation for a monetary union by the year 2024.
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