Kenya and Rwanda have entered into a deal which will see an overarching cross-border payment service between the two states.
In a joint memo, the Central Bank of Kenya (CBK) and the National Bank of Rwanda (NBK) agreed to develop a Licence Passporting Framework for Payment Service Providers (PSPs) operating in both jurisdictions.
It is expected to address the challenge of duplicative regulatory processes that exist despite significant similarities in licensing requirements.
“By promoting mutual recognition of licensing regimes, the Framework will facilitate the responsible expansion of licensed PSPs across Kenya and Rwanda, while preserving robust regulatory oversight and supervisory cooperation,” read the memo.
The announcement is against the backdrop of efforts under the East African Community Cross-Border Payment System Masterplan, which seeks to create a more integrated, efficient and inclusive regional payments ecosystem.
Partner states are working towards establishing a mutual recognition framework for licensing payment service providers.
Also Read: Rwanda Receives $84 Million from ATIDI For New Airport Construction
The approach is intended to reduce regulatory fragmentation that has historically constrained the growth of cross-border payment services in the region.
According to Africa Nenda, regulatory fragmentation in East Africa, driven by inconsistent licensing, divergent KYC/AML rules, and capital controls, has long hindered cross-border payments.
This siloes domestic mobile money, forces reliance on slow, costly correspondent banking, and hampers small business growth. Key barriers include limited interoperability and weak harmonisation across national central banks
