EAC moves to ease payments system

EAC Secretary General Dr Richard Sezibera

Transactions within the East African Community states are set to become faster and  easier following the launch of the EAC Payment and Settlement Systems Project (EAC-PSSIP).

 

The project was launched here yesterday by the EAC Secretariat and the African Development Bank (AfDB). 

 

The major objective of the project is to broaden and deepen the financial sector by the integration of the regional financial market infrastructure and facilitating cross border fund transfers.The project is also aimed at supporting the economies of the region and providing outreach to rural areas in order to encourage greater participation in the formal financial sector.

The five central banks of the EAC partner states will facilitate the implementation of the project, which is expected to speed up payment system in the region.

 

Speaking at the launch of the project Dr Natu el-Maamry Mwamba, who is the Bank of Tanzania’s deputy governor (In-charge of Economic and Financial Policies), said the project takes East Africans to the next level of regional integration.

 

She said from now on East African traders and ordinary citizens, will be required to use their local currencies when doing transactions within the region.

 

“This project gives room for traders and ordinary people to easily carry out business using currencies of their countries,” she elaborated.

 

For his part, EAC Secretary General Dr Richard Sezibera said the project is a major factor in deepening the integration of the region’s financial sector.

 

“Functioning payment and settlement systems represent a basic infrastructure for the functioning of market economies. This is because they provide effective mechanisms for the exchange of money between transacting parties; ensure finality and irrevocability of both payment and settlement; enables management, reduction and containment of systemic and other payment related risks and facilitate implementation of monetary 

policy,” he said.

 

In a speech, read on his behalf by EAC Deputy Secretary General (Planning and Infrastructure), Dr Enos Bukuku, the SG said the project is geared to see the development of sound payment and settlement systems within the region. 

 

“This will also facilitate the integration of EAC economies into single monetary area through efficient means of understanding payments within the region,” he said.

 

Dr Sezibera further noted that the trading bloc envisages a wider outlook which will include achieving collaboration on addressing any existing infrastructure weaknesses within the region’s financial integration space.

 

AfDB representative, Jacob Mukete said the project is expected to facilitate the transition to a single integrated financial system and enable the processing and settlement of payment obligations in a timely manner, enhance accountability, minimise errors and facilitate the development of innovative financial products while better managing risks.

 

“This is an important project as it will support the development of central securities depositories and core banking platforms in the EAC Partner States,” he added.

 

According to Mukeke, the project also supports capacity building in specific areas of payment and settlement systems for relevant stakeholders in the region such as judges and judicial officers at the East African Court of Justice and relevant members of East African Legislative Assembly (EALA) in the legislative support required for payment and settlement systems, commercial law and enforcement of collateral.

 

Kenya’s Central Bank Governor, Prof Njuguna Ndung’u noted that the project will modernise, harmonise and create a regional integration of payments and settlement systems.