East Africa’s biggest economies have launched an integrated real-time cross-border payments system designed to remove bottlenecks to business and bolster intra-regional trade, Kenya’s central bank said on Wednesday.
The East African Payments System (EAPS) is an early step towards the creation of a monetary union within the five nation East African Community (EAC) trade bloc, which member states hope to establish within 10 years.
“EAPS will facilitate trade within the region and is a quick win for the EAC,” the Central Bank of Kenya said in a statement.
Each member state currently has its own banking payment systems, meaning cross-border transfers take from one to two days, bankers say.
EAPS will enable people in Kenya, Uganda and Tanzania to make and receive payments in real time, speeding up the process of commercial transactions. Rwanda and Burundi, whose banking structures are less advanced, will join later.
A common currency remains a long way off, analysts say. Member states first need to implement the free movement of labor, goods and services, which has proved especially contentious in Tanzania.
Their economies will also need to meet macro-economic criteria, including capping inflation at 5 percent and fiscal deficits excluding grants below 6 percent of national output before embarking on a monetary union.
It took the region’s economies several years just to agree on the wording of the draft protocol signed last month.