East Africa: cross-border payment system is under way

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 by 2025, reuters.com reports. Each member state currently has its own banking payment systems, meaning cross-border transfers take from one to two days.

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% and fiscal deficits excluding grants below 6% of national output before embarking on a monetary union. It took the regions economies several years just to agree on the wording of the draft protocol signed in March 2015.