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The Nairobian

Plan to integrate financial systems in EAC unveiled

Business

By - | Jan 29, 2013

By Jackson Okoth

It will soon be possible someone in Kenya to wire funds anywhere within the five East African countries at the touch of a button. This dream will become a reality once the regional payment and settlement system is complete.

The East African Community Payment and Settlement Systems Integration Project (EAC-SSIP) aims to improve clearing and settlement cycle for local and up-country cheques within the East African region from T+10 to T+5 by next year, and T+3 by 2016.

Legislative support

Once complete, this new infrastructure is expected to increase inter-bank high-value funds transfers to $340 billion (Sh29.8 trillion) in 2014 and $420 billion (Sh36.8 trillion) in 2016. All the five EAC countries are expected to provide the necessary legislative support to ensure all the payment and settlement systems in the region are interlinked.

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The project is expected to put in place well-functioning and integrated Real Time Gross Settlement (RTGS) Systems in the region, which will support the development of Central Securities Depositories and Core Banking Platforms in some of the EAC Partner States. In addition, the project will provide supporting infrastructure to the payment systems, including business continuity and disaster recovery platforms.

Trade facilitation

In a statement, the ADB said the project is aligned to the Fourth EAC Development Strategy, and the EAC Common Market Protocol, which emphasises trade facilitation, establishment of a single market in financial services, establishment of the EAC Monetary Union, and integration of ICT into regional development initiatives, amongst others.

The creation of an integrated wholesale and retail payment and settlement systems will strengthen the efficiency of cross-border fund transfers, strengthening financial sector regulatory and legislative capacities, with a view to promoting financial sector development and integration in the region.