Cenfri: A Cross-Border Payments Masterplan for the East African Community

A Cross-Border Payments Masterplan for the East African Community – the flags for wholesale and retail modernisation are planted for the coming years, promising faster speed, lower cost, more transparency, and wider access for the people in East Africa if implemented

Over the past year, Cenfri and its partners (Africa Cybersecurity Resource Centre – ACRC, and Inclusive Digital Experts Africa – IDEA) assisted the East African Community (EAC) Partner States – Democratic Republic of the Congo (DRC), the Federal Republic of Somalia, the Republics of Burundi, Kenya, Rwanda, South Sudan, Uganda, and Tanzania – and the EAC Secretariat in forging the path of cross-border payments modernisation in the region.

The EAC Payment System Subcommittee, comprising the Heads of National Payment System Departments of all Partner States as well as dedicated experts from each central bank, collaborated diligently to agree on the aptly named “Masterplan” that sets out the ambitious cornerstones of modern cross-border payments in the regional economic community (REC).

The Masterplan was made possible by the generous support of the Gates Foundation through TradeMark Africa (TMA) and was officially adopted by the central bank governors during their recent ordinary meeting in Mombasa, Kenya.

Why is a Multi-Country Strategy Needed?

The main objective of the EAC Treaty from 2000 is to promote regional integration and cooperation among the Partner States in political, economic, social, and cultural fields. The East African Monetary Union (EAMU) Protocol, adopted in 2013, laid the groundwork for deeper financial and economic integration among EAC Partner States. The clear overall goal is to develop a common currency and harmonised regulatory frameworks over time. Achieving this vision requires more than policy coordination.

Back in 2023, the EAC central bank governors noted the evolving payments landscape in the region: a surge in digital payments adoption, partially aided by the COVID-19 pandemic; a flurry of new cross-border payment service providers, supported by domestic licensing reforms in several of the Partner States as well as a surge in increasingly mainstream technologies, like virtual assets; a rapid increase in the number of bilateral partnerships between cross-border payment value chain actors; and the development of domestic fast/instant payment systems, such as eKash in Rwanda and TIPS in Tanzania. In addition, development partners were keen to support impactful initiatives to advance digital and financial inclusion, digital transformation, and payment system modernisation.

Globally, cross-border payment system innovations, regulatory harmonisation, and investigations around transformational solutions like central bank digital currency (CBDC) put further momentum on the need for cross-border payments modernisation in the EAC.

While many national and regional initiatives on payment systems were implemented over the years — for example, the East African Payment System (EAPS) that connects four Partner States’ real-time gross settlement (RTGS) systems for wholesale cross-border payments — these were not guided by a coherent strategy that ensured coordination, integration, and harmonisation of efforts towards achieving a fit-for-purpose payment ecosystem in the region.

Given the continental push for closer trade relationships within Africa, the need to reduce illicit financial flows across borders as well as protect consumers from the onslaught of online payment scams and fraud, the Partner State central banks therefore decided to embark on a regional approach to make cross-border payments faster, safer, cheaper, transparent and more integrated in order to facilitate trade and financial inclusion in the region.

What to Expect?

The strategy is not only focused on creating the infrastructure for a cross-border payment system — the natural assumption when someone hears “Payment System Masterplan.” Instead, it comprises a holistic set of building blocks sequenced to ...

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