Residents of Kenya, Rwanda, Uganda, Burundi and Tanzania will now be able to travel with their respective national currencies in other East African Community (EAC) countries and make digital cross-border cash transactions in real time.
The new development comes through the just launched East African Community project on Payment and Settlement Systems Integration Programme (PSSIP) which has been carried out in Arusha and is aimed at introducing a seamless payment system.
The system will bridge member states’ transaction gaps on the road down to the proposed East African Monetary Union.
The system connects the five Central Banks in Kenya, Rwanda, Uganda, Tanzania and Burundi through special technological networking based on the digital fibre-optic backbone to allow seamless and real time transactions.
“This system enhances crossborder payment systems in the EAC region and enables members of the public in their respective countries to pay as well as receive payments in real time and in local currencies,” said Prof. Njuguna Ndung’u the Governor of the Central Bank of Kenya.
He was speaking shortly after the EAC-PSSIP launch at the EAC Headquarters in Arusha on Monday. Prof. Njuguna explained that the project, which is being executed under the first phase of the EAC Financial Sector Development, follows a successful initiation of the East African Payment System (EAPS) last November with the latter already bearing fruit as can be seen in the recent successful mobile cash transfers across the region.
The Deputy Governor in charge of Economic and Financial Policies with the Central Bank of Tanzania (BOT), Dr Natu El-Maamry Mwamba, pointed out that the EAC-PSSIP will add value to the local currencies used by the five member states and ease the burden of regularly converting currencies whenever one moves from one country to another.
“Specifically the project is expected to put in place well-functioning and integrated Real Time Gross Settlement (RTGS) Systems in the region and will also support the development of Central Securities Depositories and Core Banking Platforms in the EAC partner states,” said Mr Jacob Muke, a representative from the African Development Bank (AfDB).
The AfDB is assisting the East African Community in the launching of the Regional Payment and Settlement System which is seen as the best way of initiating convergence of the markets in the bloc.
The EAC Deputy Secretary General in charge of Planning and Infrastructure, Dr Enos Bukuku, said that the PSSIP will hatch solidarity in integration, financial cohesion and inclusive growth plus making the bloc more enticing for foreign as well as local investments.
Experts in Arusha also say that the move is another positive development in the tourism sector though others wonder if foreign exchange shops will be able to survive or at least make enough profit under this new arrangement which is likely to cut down the number of currency exchange transaction across the region.
Originally Published on Daily News Tanzania