EAC states urged to reduce foreign exchange and money transfer fees to boost trade

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EAC states urged to reduce foreign exchange and money transfer fees to boost trade

NAIROBI, Kenya- The East African Business Council [EABC] called on the East African Community[EAC] Member States to reduce exchange and money transfer fees in order to stabilize regional currencies and stabilize exchange rates within the region.

According to John Bosco Kalisa, CEO of the East Africa Business Council. “As private sector players, we are particularly concerned about the rising fees on mobile money transfers and the cost of remittances and payments. I urge the governments of the EAC Partner States to pursue initiatives to reduce foreign exchange fees when transacting as an interim solution in the absence of a single currency.

The EABC pointed out that remittances, non-commercial transfers of money by foreign workers for domestic use, are particularly important for low-income countries and represent almost 4% of their GDP, compared to around 1.5% of GDP for middle-income countries.

Mr. Kalisa was speaking in Dar es Salaam last week at a webinar forum to discuss harmonization of payment systems, where he also called for full interoperability of mobile money networks and transactions/ cross-border payments at EAC level.

The forum brought together the central banks of the seven partner states of the EAC, the participants asked the Ministries of Finance to harmonize legal procedures to facilitate remittances.

“In the EAC region, the average fee for sending $200 – the benchmark authorities use to gauge the cost – is $14. Senders and receivers will be charged the equivalent of 29.7% of the amount In addition, the amount received depends on the exchange rate. In the absence of monetary union, regional currencies should be freely convertible to allow transactions without having to convert national currencies into dollars to improve regional trade and reduce transaction costs,” added Kalisa.

EABC calls for full interoperability of mobile money networks following a report by Africa RISE, a technical assistance facility funded by the European Union, which reveals that the payment and settlement system of East Africa (EAPS) is currently operational in only four of the seven EAC countries. states.

Paul Baker – Africa Rise Representative “South Sudan’s payment system is under development, with support from the AfDB under the EAC Payment and Settlement Systems Integration Project (EAC PSSIP ) while the Democratic Republic of the Congo expands its developing national payment system, with support from the World Bank.

While EAPS allows processing and settlement of transactions in local currencies, there is low adoption due to low intra-regional trade volumes and high competition from banks with established correspondent banking relationships.

The report titled “Harmonization of Payments Systems in the EAC” and dated September 15, 2022, reveals that EAPS is currently operational between Kenya, Tanzania, Uganda and Rwanda, linking the gross settlement system in time (RTGS) of their central banks.

The report further points out that not all EAC states use the payment system, which makes it difficult for their citizens to send money to the region.

GAROWE ONLINE

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