
Ghana and Rwanda are working to link their national payment systems and establish a fintech licensing passport system, Rwanda’s central bank governor, John Rwangombwa has said.
The initiative, reportedly backed by the Monetary Authority of Singapore, will officially launch at the Inclusive FinTech Forum in Kigali from February 24-26, 2024, which will be attended by industry leaders and regulators from Ghana.
Africa’s fintech sector faces hurdles due to fragmented regulations, forcing companies to obtain multiple licenses across different countries.
Rwanda and Ghana aim to streamline this process, drawing inspiration from Singapore’s fintech success in East Asia.
The Africa Fintech Network has long argued that regulatory fragmentation slows down innovation and cross-border expansion.
A unified licensing system could accelerate fintech growth, reduce costs, and encourage more African nations to join.
AfricaNenda
Indeed, the AfricaNenda Foundation has also been on the forefront of pushing for proper harmonization of payment system and fintench regulation across the continent.
At the launch of its latest State of Inclusive Instant Payment Systems (SIIPS) in Africa report, Deputy CEO of AfricaNenda Foundation, Sabine Mensah particularly proposed passporting of licenses as one critical way to harmonize regulations and enable easy cross-border payments.
Also Read: Regulatory harmonization critical to cross-border payments in Africa – AfricaNenda
In the EU for instance, due to the passporting licensing policy, fintechs and merchants are able to obtain a license in one EU country and that gives them access to all other EU countries. But in Africa, payment licenses are still country specific, and that is a barrier to cross-border payments.
Not only are payment licenses in Africa limited to one country, but it also takes 18 to 24 months to obtain one payment license in a typical African country, compared to just about three months to obtain a similar license in the EU, which gives access to all EU member countries.
Ghana and Rwanda’s initiative in that direction is a welcoming one, but there is still no set timeline for when the payment system linkage will go live.
Rwangombwa stressed the need for expanding membership in the Pan-African Payment and Settlement System (PAPSS), launched by Afreximbank in 2022 to eliminate the need for dollar or euro conversions in intra-African trade.
GhIPSS
This is an issue the CEO of Ghana Interbank Payments and Settlements Systems, Archie Hesse has expressed very strong views about, saying that it is for the heads of central banks on the continent to sit at the roundtable and agree on what parts of their respective sovereignties to sacrifice in order for the integration to happen in reality.
According to him, until the central banks are able to cede some of their territorial sovereignties in the interest of the common good, no amount of talk shop will result in real integration or harmonization of regulations to drive impactful cross-border transactions.
He thinks that cross-border payments across the continent can only be decoupled from dollar pegging when the central bank heads agree to make the necessary sacrifices and rollout decisive policies that ensure seamless exchange between currencies without the dollar being in the middle.
PAPSS currently has 14 central bank members and 50 commercial banks. Egypt joined in November, with more of its banks expected to sign up.
Rwangombwa is pushing for PAPSS to provide the technical backbone for the Ghana-Rwanda payments linkage.
Progress on AfCFTA implementation has been slow, and cross-border payments remain a bottleneck. “That’s what we want to achieve across the continent,” Rwangombwa said.
