It will be a lot easier and cheaper to transfer money across four countries in East Africa on different telecommunication platforms following the adoption of harmonised money transfer services.
Uganda, Kenya, Rwanda and South Sudan have adopted the harmonised money transfer guidelines and uniform rates developed by their central banks and communication commissions with the aim of boosting trade in the region.
According to Joseph Nyagah, Kenya’s national co-ordinator for the Northern Corridor Integration Programme, the new harmonised rates will be formally published but will become operational immediately after the Northern Corridor Heads of State Summit scheduled for October 17.
“The central bank officials from the four partner states are finalising the regulations to govern the cross-border transfers and these will be published with the harmonised rates,” said Mr Nyagah. “But they are a fraction of the current mobile transfer rates.”
Denis Karera, the chairman of the East African Business Council, described the harmonisation of rates as an important enabler of trade that will provide timely and cost-efficient ways of transferring money, ease doing business and strengthen the One Network Area initiative.
“Regional remittances will greatly reduce the cost of doing business across the EAC borders as well as ease other challenges, including sending money to students studying in other partner states,” said Mr Karera. “This should be adopted by all the EAC partner states.”
However, telecommunications experts say that, while the move will increase trade across the region, it could lead to losses for telecoms that make money from international money transfer deals.
Traditional money transfer firms such as Western Union and MoneyGram will face stiff competition from the telecoms, they said.
“To compete in the new technology in money transfers, these companies will have to partner with the mobile companies to remit money across borders,” said Eric Musau, a Kenyan business analyst at Standard Investment Bank.
Western Union has already integrated its system with a number of mobile money platforms in the East African Community so as to permit international remittances.
Mr Musau said banks that have partnered with the mobile companies and operate across the borders too stand to benefit from the new arrangement.
Some telecoms have already partnered in cross-border money transfer — albeit at higher rates, which are now likely come down.
Vodafone, which owns 40 per cent of Safaricom, signed a deal in April giving M-Pesa customers access to seven African countries.
Earlier, London-based Vodafone Group and South Africa’s MTN Group had also signed a deal that allowed their customers in East and Central Africa to transfer money to each other. Millicom also announced it would allow its customers in Tanzania and Rwanda to send money to one another.
MTN Rwanda, MTN Uganda and Safaricom in Kenya also recently signed an agreement that is expected to deepen financial inclusion and boost regional trade.
MTN Mobile Money and M-Pesa users can now send and receive money across the two networks, which are owned by MTN Rwanda and Safaricom, respectively.
This comes just a month after the introduction of cross-border transactions between MTN Rwanda and MTN Uganda.