The East African Community (EAC) has made noteworthy progress in the realm of digital integration through the validation of the Draft EAC Cross-Border Payment System Masterplan. This groundbreaking initiative, announced on 25th March 2025, represents a significant advancement towards economic growth, financial inclusion, and deeper economic integration within the region. The Masterplan was validated in Mombasa, Kenya, during the EAC Regional Payment Systems Steering Committee meeting held from 17th to 21st March 2025.
Transforming Cross-Border Payments
Central to the EAC’s initiative is the goal of revolutionizing cross-border payments, aiming to improve the speed, security, affordability, and integration of payment systems. The Chairperson of the Steering Committee, Mr. Michael Eganza, emphasized the project’s crucial role, highlighting its potential to create seamless, cost-effective, and inclusive financial ecosystems. Such advancements are essential to drive economic collaboration and growth across the region.
The EAC envisions a scenario where cross-border transactions are not only fast and straightforward but also significantly enhance economic integration. This vision aligns perfectly with the EAC Monetary Union’s objectives to establish a secure, efficient, and interoperable payment framework that benefits all partner states. By bolstering these systems, the EAC is setting a strong foundation for a future marked by increased financial inclusion and economic collaboration.
Strategic Framework and Key Pillars
The Masterplan’s strategic framework relies on four key pillars designed to address the region’s most pressing payment challenges. The first pillar is Governance, Legal, Regulatory, and Oversight Framework, focusing on developing harmonized regulations to enhance compliance and interoperability. By creating a unified legal and regulatory environment, the EAC aims to remove barriers that impede seamless financial transactions across borders.
The second pillar, Infrastructure, prioritizes the modernization and expansion of payment systems to enable faster and cost-effective transactions. Enhancements to the East African Payment System (EAPS) are pivotal in this regard, facilitating efficient cross-border transfers. These infrastructure upgrades are essential to accommodate the growing demand for improved payment services and support the region’s economic activities.
The third pillar, Inclusivity, ensures equitable access to payment systems for individuals, businesses, and financial institutions across all Partner States. By promoting inclusive financial services, the EAC seeks to bridge the gap between different socio-economic groups, fostering comprehensive economic growth. The fourth pillar, Capacity Building, aims to strengthen technical expertise and financial literacy to support sustainable modernization efforts. This pillar is crucial for equipping the region’s workforce with the necessary skills to manage and operate advanced payment systems.
Addressing Significant Hurdles
The Masterplan proposes twenty targeted initiatives to address challenges such as fragmented regulations, high transaction costs, and limited interoperability. One key initiative is the establishment of a mutual recognition framework for cross-border Payment Service Provider (PSP) licensing. This framework will facilitate the seamless operation of PSPs across different jurisdictions, reducing complexities and enhancing service efficiency.
Another significant initiative involves creating a harmonized regulatory framework for mobile money and e-wallet transactions. Given the widespread use of mobile money in East Africa, a unified regulatory approach will ensure consistent service standards and promote consumer confidence. Additionally, developing regional instant retail payment switches is crucial for enabling real-time transactions, further enhancing the efficiency of cross-border payments.
The Masterplan also emphasizes promoting public-private collaboration through a regional payments system forum. Engaging both sectors is vital for fostering innovation and addressing common challenges. Strengthening consumer protection measures is another priority, ensuring that users of cross-border payment systems are safeguarded against fraud and other risks. Moreover, the Masterplan explores the adoption of emerging technologies such as AI and cloud computing to further modernize cross-border payments, enhancing security and efficiency.
Phased Implementation Approach
A phased approach to the implementation of the Masterplan has been recommended, with clearly defined timelines for key milestones. The short-term phase, spanning 1-2 years, focuses on foundational aspects such as regulatory harmonization, foundational infrastructure upgrades, and capacity-building initiatives. These initial steps are critical for laying the groundwork for more advanced developments in the future.
In the medium-term phase, covering 3-5 years, the goal is to achieve full interoperability of partner states’ payment systems and operationalize the regional instant retail switch. This phase is essential for ensuring that payment systems across the region can communicate seamlessly, enabling efficient and real-time transactions. Interoperability is a key factor in creating a unified regional payment ecosystem.
The long-term phase, extending beyond 5 years, aims to enhance deeper regional integration, align with global payment networks, and adopt emerging financial technologies to ensure sustainable progress. By aligning with global standards, the EAC can position itself as a competitive player in the global financial landscape. Embracing new technologies will also enable the region to stay ahead of evolving financial trends, ensuring continued relevance and innovation.
Support from EARDIP and Policymakers
The Eastern Africa Regional Digital Integration Project (EARDIP), funded by the World Bank, is expected to significantly support the implementation of the Masterplan. EARDIP aims to advance digital market integration in Eastern Africa by enhancing cross-border broadband connectivity, data flows, and digital trade through various components, including Online Market Development and Integration. This component seeks to improve interoperability between digital payment systems across the region.
By fostering greater connectivity and financial inclusion, EARDIP’s support is poised to contribute substantially to the Masterplan’s success. Policymakers and development partners have expressed strong backing for the initiative, recognizing its potential to drive economic growth and position East Africa as a leader in cross-border payment innovation. The collaboration between different stakeholders is crucial for the comprehensive and successful implementation of the Masterplan.
Simon Peter Owaka, Senior Public Relations Officer at the EAC Secretariat, emphasized that an effective cross-border payment system is vital for regional economic growth and financial inclusion. The successful implementation of the Masterplan is expected to bolster trade, investment, and economic collaboration across the region. Such developments will propel East Africa towards becoming a global leader in financial modernization.
Expanding Cooperation within the EAC
The East African Community (EAC) has made significant progress in digital integration with the validation of the Draft EAC Cross-Border Payment System Masterplan. This innovative initiative, announced on March 25, 2025, marks a considerable step toward economic growth, financial inclusion, and enhanced economic integration in the region. The Masterplan was validated in Mombasa, Kenya, during the EAC Regional Payment Systems Steering Committee meeting held from March 17 to 21, 2025. The EAC aims to streamline and facilitate cross-border transactions, enhance regional trade, and enable seamless financial operations within its member states. By modernizing payment systems, the EAC is working to reduce transaction costs, increase transparency, and improve the efficiency of financial processes across borders. This effort is expected to benefit businesses and individuals, making financial services more accessible and promoting a more inclusive economy. The Masterplan aligns with the broader goals of the EAC to foster regional cooperation, economic stability, and sustainable development through digital innovation and strategic initiatives.
