Bulk cash transfer cost falls

Dar es Salaam. The cost of transferring bulk funds across commercial banks in Tanzania, Kenya and Uganda fell tremendously during the past eight months, thanks to the introduction of a new payment system.

The Bank of Tanzania (BoT) principal economist, Mr Alli Liyau, told The Citizen at the 38th Dar es Salaam International Trade Fair on Saturday that, with the East African Payment System (EAPS), it required a flat rate of Sh10,000 to transfer bulk funds across the three countries.

The EAPS became operational in November, 2013.

Before the EAPS was introduced, transferring bulk funds would cost more for it depended on the amount to be transferred.

“Before November 2013, if, for example, one wanted to transfer $50 million (Sh80 billion) from Tanzania to Kenya, he or she was supposed to pay - say 0.05 per cent of that amount - which is equal to Sh4 million… but now it costs only Sh10,000,” he said.

According to him, the EAPS which is also known as Real Time Gross Settlement (RTGS), has dramatically reduced the cost of interbank money transfers in the region, which is expected to reduce the cost of doing business.

“Currently, the three East African nations — Tanzania, Kenya and Uganda — are members of RTGS under which their currencies are subject to automatic conversion during transactions. It is the easiest and the cheapest means of transferring huge amounts of funds within the region,” he said.

Other EAC member states Burundi and Rwanda are at a preparatory stage to join the RTGS in the near future, according to him.

For his part, the BoT bank examiner Mr Chacha Wang’enyi, said that the 53 registered commercial banks in Tanzania are also integrated within the RTGS with capacity to carry out money transfers.