- Posted December 6, 2013 by
This iReport is part of an assignment:
The Africa we don't see
EAC partners adopt seamless pay system
The system works in a similar fashion to the real time gross settlement system (RTGS) which has been in use in each of the three countries for a number of years and has become very popular with traders who move large sums of money.
Louis Kasekende, deputy governor, Bank of Uganda (BoU) on Tuesday said that the East African Payment (EAPS), which is eventually expected to link the RTGS’s of all the East African Community (EAC) member countries, went live on November 25.
“Rwanda and Burundi are expected to join the integrated regional payment system at a later date when ready,” said Louis Kasekende, deputy governor BoU in a statement.
The new payment system comes days after the five presidents of the economic bloc signed the Monetary Union Protocol which is intended to result in a single currency in 10 years’ time.
It is part of a larger plan by the EAC economies to integrate their money and capital markets and has been under development for over a year.
The bank regulators in in the region have already implemented robust RTGS systems in the respective countries and some such as the Central Bank of Kenya (CBK) have placed a ceiling above which traders must use the system to move funds so that an audit trail can be generated.
CBK requires the use of RTGS for payments of more than Sh1 million ($11,550) but over time the system has proved popular even for payments of as low as Sh100,000 ($1,150).
Early this year, the National Bank of Rwanda announced that it had rolled out its Rwanda Integrated Payments Processing System connecting the country to the Comesa Regional Payments and Settlement System.
The EAC region has made huge gains in intra-regional trade and increased movement of workers and families among member states since 2005 but the lack of a convenient and safe way to make and receive payments has remained an impediment.
Dr Kasekende said that the EAPS is a multi-currency system in which payments are effected using any of the currencies of the EAC partner states.
“It will make cross border payments easier and facilitate safe and efficient transfer of monetary value within the region. EAPS will also be vital in promoting regional trade and enhancing economic integration,” said Dr Kasekende.
CBK data shows that transactions between January and October this year on RTGS system totalled Ksh18.78 trillion ($220.58 billion) which is a Ksh1.097 trillion short of the Ksh19.87 trillion ($231.08 billion) transacted in 2012.
In 2011, Ksh21.89 trillion ($257.36 billion) transacted and in 2010 the amount totalled Ksh17.1 trillion ($211.78 billion).
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