KAMPALA – East African Community (EAC) member states are moving to reduce dependence on the US dollar in cross-border trade through an integrated regional payment and settlement system that will allow businesses and individuals to transact directly in local currencies.
The proposed system is expected to lower transaction costs, boost intra-regional trade and lay the foundation for the bloc’s long-term ambition of establishing a monetary union and eventually adopting a single regional currency.
First Deputy Prime Minister and Minister for East African Community Affairs Rebecca Kadaga revealed the plans while presenting a statement on the implementation of the East African Payment System (EAPS) before Parliament on Tuesday, November 3, 2026.
“A fully integrated payment and settlement system will reduce the cost of doing business, deepen intra-EAC trade and provide an important foundation for the proposed East African Monetary Union and eventual single currency,” Kadaga told Parliament.
She said the ultimate objective is to establish a regional payment ecosystem through which individuals and businesses can transfer money securely, instantly and affordably between any two EAC partner states using bank accounts, mobile money wallets and other authorised digital payment channels.
Currently, the main mechanism is the East African Payment System, which links the national Real-Time Gross Settlement systems of Uganda, Kenya, Tanzania and Rwanda.
According to Kadaga, the platform enables commercial banks to transfer money across borders securely and settle transactions in regional currencies, including the Uganda shilling, Kenya shilling, Tanzania shilling and Rwanda franc.
However, Burundi, South Sudan, the Democratic Republic of Congo and Somalia are not yet fully integrated into the platform, limiting the bloc’s ambition of establishing a seamless regional payment network.
To address the gaps, Kadaga said the EAC adopted the Cross-Border Payment System Masterplan in 2025 to expand and modernise the existing payment infrastructure, harmonise licensing and regulation of payment service providers and promote the use of partner states’ currencies in regional transactions.
She called on the Ministry of Finance, Planning and Economic Development, Bank of Uganda, commercial banks, mobile network operators and financial technology companies to work closely with her ministry to ensure effective implementation of the masterplan.
Kadaga also urged Parliament to support the harmonisation of Uganda’s payment-system laws with regional frameworks, provide adequate resources for digital and financial infrastructure and monitor the country’s implementation of EAC integration commitments.
Liquidity challenge
Although welcoming the initiative, Shadow Minister for East African Community Affairs Hakim Kizza challenged the government to go further by championing the establishment of a central bank-backed liquidity facility to ensure commercial banks have sufficient supplies of regional currencies.
He argued that inadequate liquidity in currencies such as the Kenyan, Tanzanian and Rwandan shillings continues to force traders to use the US dollar as an intermediary in cross-border transactions.
“Despite the rhetoric of local currency settlement, traders are still forced to convert to the US dollar for cross-border transactions due to liquidity shortages in regional currencies at commercial bank levels,” Kizza said.
He cited the example of a Ugandan trader purchasing goods from Kenya, who may have to convert Uganda shillings into US dollars before converting the money again into Kenya shillings.
Kizza said the double conversion increases transaction costs while allowing commercial banks to benefit from additional foreign-exchange charges.
A regional liquidity facility, he argued, would ensure that banks can access adequate amounts of partner states’ currencies, making direct local-currency settlements more practical and reducing unnecessary reliance on the dollar.
Single currency ambition
Meanwhile, Kazo District Woman Representative Molly Kamukama said achieving an East African single currency would be one of the major steps towards making the regional payment system more effective.
The proposed monetary union is part of the EAC’s broader integration agenda, which seeks to deepen economic cooperation, facilitate trade and investment and strengthen the region’s collective economic position.
Speaker of Parliament Jacob Marksons Oboth called for regular updates on the progress of regional integration and increased public awareness of its benefits.
He asked the Ministry of East African Community Affairs to prepare a comprehensive report outlining the status of integration, the challenges facing the bloc and the opportunities available to partner states.
“We need to know the status of our integration, generally. We have organised a marathon in November to create awareness. We request the Minister of EAC to prepare a status report on the integration, highlighting challenges and opportunities,” Oboth said.
The proposed payment reforms come as the EAC seeks to strengthen regional economic integration by making cross-border transactions cheaper, faster and less dependent on international currencies.
If fully implemented, the system could ease trade among member states, particularly for small businesses and traders who currently face high currency-conversion costs when conducting regional business.
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