Payment and Settlement Systems Integration in EAC
A Conference on Payments and Settlement Systems Development and Integration in the East African Community (EAC), attended by policy-makers, central bankers, bank associations, regulators, and private sector mobile network operators, technology companies, and independent service providers and other experts ended on Friday 10 December 2010, in Kigali (Rwanda) after intense discussions on key payment and settlement systems development issues facing the EAC.
The conference called for a regional financial system that will deliver affordable, safe and efficient financial services to the region, including the unbanked and rural Population.
The meeting was jointly organized by the EAC and African Development Bank (AfDB).
Opening the conference, Rwanda’s National Bank Governor, François Kanimba, underscored the importance of efficient payment and settlement systems as a prerequisite for an effective common market, and in creating a platform for smooth funds transfers, economic and financial operations.
He emphasized the need to address several issues including the safety of payments and remittances within the EAC, and standardization of oversight and regulatory mechanisms.
The EAC Director General (Customs and Trade), Peter Kiguta, emphasized the need to harmonize practices in the financial system and capital markets in the region to underpin the smooth functioning of the EAC’s Customs Union, Common Market and Monetary Union. He also thanked the World Bank for supporting the EAC with US$16 Million, through a Financial Sector Development and Regionalization Project (FSDRP).
Louis Kasekende, Bank of Uganda Deputy Governor, stated that the regulatory framework for payment and settlement systems in all East African countries was incomplete and fragmented.
Innovations in payments are being introduced at an accelerating pace (e.g. mobile money), he said, noting, however, that regulation was lagging. Regulatory gaps needed to be closed to facilitate a safe and efficient system for cross border transactions, he said.
For his part, the AfDB Group Governance, Economic and Financial Reforms Director, Gabriel Negatu, urged delegates to “think outside the box” to find innovative solutions to several issues of integrating low value money transfer systems, including cards mobile payments, that have a huge potential of delivering affordable financial services to the unbanked and the poor.
Mr. Negatu used the occasion to thank the Rwanda government and the EAC Secretariat for organizing the event, and the Canadian government for its financial contribution that has made the conference possible.
The Conference was structured around the key infrastructure development and regulatory issues with a key objective of linking national payment and settlement systems to establish single regional payment and settlement area, requiring: integration of infrastructure; harmonisation and integration of regulations; removal of barriers between national systems; and establishment of regional payments and settlements systems operations.
Representatives of other regional blocks including the Central Bank of West African States and the West African Monetary Institute shared their experiences with the participants from the EAC.
The conference concluded by defining a draft Road Map that EAC governments, central banks and regulators will need to take to support innovation, development and integration of the payment and settlement systems in the region. The road map will be presented to the next meeting of the Monetary Affairs Committee (MAC) of the EAC that will take place in Zanzibar later this month.