New system sends Sh3.3bn across EA in six months

Payments within East Africa can now occur in real time following the official inauguration of the East African Payments System (EAPS).

It has so far enabled transactions valued at Sh3.3 billion ($37.6 million) across borders since November 25, 2013 when testing began. 

The regional payments platform was on Friday last week officially launched by Central Bank governors and officials of the regional trading bloc to speed up regional integration and trade.

According to Central Bank governor Njuguna Ndung’u, the platform allows the community’s public and business owners to send and receive cross-border payments in any of the region’s currencies from any commercial bank in the three East African countries.

“Its implementation will address deficiencies in the current cross-border payment methods through enhanced efficiency and risk controls,” said Prof Ndung’u, who is also the chairman of the EAC Monetary Affairs Committee of Central Bank governors.

The EAPS cross-border payment is an initiative of regional central banks and the EAC secretariat in collaboration with commercial banks. The system integrates all the Real Time Gross Settlement Systems of Kenya, Tanzania and Uganda for delivery of payments.
Central banks will provide the infrastructure for those without currency conversion within the system.

Customers and their respective banks will agree on exchange rates and the source of required forex outside the central banks. The real time gross settlement system has also been enhanced to accommodate different currencies of partner states.

The EAC deputy secretary general for planning and infrastructure, Mr Enos Bukuku, said the platform will transform doing business in the region by speeding up settlement of transactions.

This is a departure from the old fragmented payment that was heavily reliant on cash and cheques, was slow and exposed to risks. This made doing business in the region difficult.

“The EAPS will provide a highway for supporting timely cross border transactions, which will boost intra-EAC trade for the benefit of citizens,” said Dr Bukuku.

Since going live in November last year, a total of 1,106 transactions have been processed successfully through the regional payment platform.

The total value of transactions in the period stands at Sh1.6 billion ($18.4 million), Tanzania shillings 2.5 billion ($15.3 million) and Uganda shillings 9.9 billion ($3.9 million).

Currently, 10 transactions are processed through the system every day.

Regional central banks now have accounts with each other to represent all commercial banks in the bloc that are also required to have accounts with their respective central banks to enable swift settlement of transactions within the system to which they are all integrated.