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How EAC plans to cut regional transaction costs by half
The East African Community headquarters in Arusha. PHOTO | FILE
What you need to know:
- The EAC has approved a landmark five-year initiative aimed at making regional transactions faster, cheaper and more secure
Dar es Salaam. The East African Community (EAC) has taken a major step toward financial integration by approving a landmark Cross-border Payment System Masterplan—an ambitious five-year initiative aimed at making regional transactions faster, cheaper, and more secure.
Endorsed during the 28th Ordinary Meeting of the EAC Monetary Affairs Committee (MAC) in May 2025, the blueprint seeks to eliminate one of the biggest hurdles to regional trade: inefficient and costly cross-border payments.
Seen by experts from across the region as a potential game-changer, the Masterplan offers a comprehensive response to long-standing challenges faced by businesses and individuals moving money across the region.
Yet, questions linger: will it truly shift the status quo and create a “new normal” for East Africa’s financial systems?
The Masterplan focuses on four key areas: policy and regulatory harmonisation, infrastructure development, financial market deepening, and capacity building. These pillars address real structural gaps that have hindered seamless money flow across borders.
Disparate regulations, for instance, have complicated operations for payment service providers, stifling innovation and raising costs. Meanwhile, high transaction fees, clearance delays, and overreliance on the US dollar continue to burden intra-regional trade.
“This Masterplan is a defining moment for the region’s financial landscape,” said Nairobi-based financial systems expert Geoffrey Kamau. “It offers a roadmap to integrate fragmented systems into one efficient, modern network aligned with the East African Monetary Union.”
However, implementation is far from simple. Political will, investment, and regulatory alignment are essential. In a regional zoom-fintech discussion held on June 3, Tanzanian consultant Anna Nsemwa emphasised policy harmonisation as the top priority.
“Each government must align domestic laws with the regional vision. No innovation survives in a fragmented environment,” she said.
Ms Nsemwa highlighted a glaring regional paradox: it is often cheaper to send money from Arusha to Dubai than to Kigali. “That’s absurd,” she noted. “Harmonisation can eliminate such economic distortions and make digital trade truly borderless.”
Some countries are already laying the foundation. In Tanzania, the Bank of Tanzania (BoT) has introduced the Transactions Cleared on Immediate Basis (TCIB) system under the Southern African Development Community (SADC), which enables low-value, real-time cross-border transactions.
The BoT recently reaffirmed its commitment to such initiatives, pledging to enhance retail payments and financial connectivity across borders. It has also participated in joint oversight of EAC payment systems.
Kenya has modernised its Real-Time Gross Settlement (RTGS) system and embraced mobile money interoperability. According to Dr Kamau, who also lectures in financial technology at the University of Nairobi, the Masterplan presents a chance to integrate existing infrastructure.
“The groundwork exists; the plan will tie systems together and ensure alignment technologically and legally,” he said via WhatsApp.
In Uganda, the central bank is preparing to upgrade its systems to link with the regional instant payment switch. Ms Mercy Atwoki from the Bank of Uganda confirmed the country’s readiness to adapt its payment rails accordingly.
Yet, infrastructure alone is not enough. Market accessibility and digital literacy must also be addressed. Rwandan fintech analyst Eric Habimana believes financial inclusion should be at the heart of the Masterplan.
“The informal trader in Goma or boda-boda operator in Mwanza should be able to send money to Gulu instantly and affordably, using local currencies—not through five intermediaries at high costs,” he said.
Supporting this ambition is the World Bank-backed Eastern Africa Regional Digital Integration Project (EARDIP), which aims to strengthen regulatory alignment, invest in cybersecurity, and improve internet access in underserved areas. EARDIP is expected to support real-time settlements and mobile money interoperability across the region.
In the long run, the Masterplan could slash transaction fees by more than 50 percent and promote local currencies over foreign ones, thereby strengthening regional economic resilience. “It’s not just about speed; it’s about sovereignty,” added Dr Kamau. “Why should intra-African trade be priced in dollars?”
If effectively implemented, the Masterplan could unlock a digital economic revolution in East Africa. Intra-regional trade would thrive, SMEs could scale beyond borders, and even rural communities would benefit from accessible financial services.
It also sets the stage for innovations like a regional digital currency, bringing the vision of an East African Monetary Union by 2031 within reach.
