The East African Community (EAC) is moving to establish an integrated regional payment system aimed at reducing cross-border transaction costs, speeding up money transfers and strengthening trade among Partner States.

First Deputy Prime Minister and Minister for East African Community Affairs Rebecca Kadaga told Parliament that the regional bloc is implementing a Cross-Border Payment System Masterplan designed to improve the efficiency, affordability, security and interoperability of payments across the region.

The Masterplan, approved by the EAC Monetary Affairs Committee in May 2025, provides for the modernisation of the East African Payment System (EAPS) and the establishment of a regional instant retail-payment switch.

The proposed system is expected to enable individuals and businesses to transfer money between Partner States using bank accounts, mobile-money wallets and other authorised digital payment channels.

According to the Masterplan, the initiative is intended to reduce reliance on foreign currencies, lower correspondent-banking costs and promote the use of regional currencies in cross-border transactions.

The existing EAPS connects the national real-time gross settlement systems of Uganda, Kenya, Tanzania and Rwanda, allowing commercial banks to transfer funds across borders.

However, the platform has not achieved full regional coverage, while cross-border mobile-money and retail-payment systems remain fragmented.

The Masterplan identifies four strategic pillars: governance and regulatory oversight, infrastructure development, financial inclusion and capacity building.

Its implementation roadmap envisages regulatory harmonisation and foundational infrastructure upgrades in the short term, followed by greater interoperability among Partner States' payment systems and the eventual operation of a regional instant-payment switch.

The EAC said technical implementation had advanced by October 2026, with three technical working groups inaugurated in Mombasa in August to guide the process.

The working groups are addressing monitoring and reporting, cooperative oversight and mutual recognition of payment service providers.

For Uganda, the initiative could improve access to affordable financial services for micro, small and medium enterprises, traders and underserved populations, while supporting increased intra-regional trade.

Kadaga said effective implementation would require coordination among the Bank of Uganda, the Ministry of Finance, commercial banks, mobile-network operators and fintech companies.

The Masterplan also calls for stronger cybersecurity, consumer protection and regulatory harmonisation, alongside efforts to ensure that informal cross-border traders benefit from the reforms.

Kadaga Updates Parliament on Political Federation

Earlier in Parliament, Kadaga said consultations on the proposed East African political federation had been completed in five Partner States.

She expressed hope that a constitution for the federation could be drafted by the end of 2026.

The political federation is one of the EAC's long-term integration ambitions, alongside the Common Market and the proposed East African Monetary Union.

The regional payment system is expected to support the bloc's broader economic integration agenda by facilitating the movement of money, goods, services and capital across Partner States.

The EAC has eight Partner States: Burundi, the Democratic Republic of Congo, Kenya, Rwanda, Somalia, South Sudan, Tanzania and Uganda.