Traders in East Africa conducted a record $2.015 billion worth of transactions through the East African Payment and Settlement System (EAPS) in the year ending June 2024. Despite rising transaction costs, businesses continued to use the platform due to its convenience for cross-border trade.

According to data from the central banks of Kenya, Uganda, and Tanzania, the value of transactions through the system increased by 40 percent compared to the previous year, surpassing the $2 billion mark for the first time. However, transaction costs within the region increased significantly, with the cost of sending $200 from one country to another rising from 17.05 percent in September 2023 to 25.4 percent by June 2024.

The EAPS was introduced in 2014 to facilitate easier and more efficient regional settlements, but participation remains limited. Only four countries—Kenya, Uganda, Tanzania, and Rwanda—currently use the system, while others have yet to join. Traditional cross-border banking methods, such as correspondent banking, continue to present challenges like high costs and inefficiencies.

Tanzania saw the highest growth in transaction value through the EAPS, reaching $261 million in June 2024—an 80 percent rise from $145 million a year earlier. However, it still remains the second-smallest participant in the system after Rwanda. The cost of cross-border transactions from Tanzania to Kenya and Uganda reached a record 55 percent, while sending money to Rwanda became more expensive, increasing from 20 percent to 36 percent.

Uganda also experienced an 18 percent increase in EAPS transactions, rising from $519 million in 2023 to $610 million in 2024. Most transactions involved exchanges between the Ugandan and Kenyan currencies. Meanwhile, Kenya remained the leading participant in the system, with transactions exceeding $1 billion for the first time, reaching $1.144 billion—a 47 percent increase from the $777 million recorded in the previous year.

However, both Kenya and Tanzania saw a drop in the number of transactions made through the system. The total number of transactions fell from 55,614 in 2023 to 47,929 in 2024, indicating that while fewer transactions were made, they involved higher amounts.

Currently, around 14 percent of intra-East African Community (EAC) trade is settled through the EAPS, but the system is still not widely used. Burundi, South Sudan, Somalia, and the Democratic Republic of Congo have yet to adopt the platform, although their trade with EAC members has been increasing since they joined the bloc.

Intra-EAC trade reached a record $14.3 billion in the year ending June 2024, reflecting an 18.9 percent increase from $12 billion in the previous year. The rise was partly due to Somalia’s entry into the EAC in 2023, which contributed to the region's trade growth.

The EAC Secretariat continues to encourage more member states to join the payment system to enhance regional trade and move closer to establishing the East African Monetary Union. According to EAC Secretary-General Veronica Nduva, the adoption of the EAPS remains low. She pointed out that many banks in the region still rely on foreign correspondent banks for cross-border payments, making transactions costly and inefficient.

“Our goal as a region is to make cross-border payments faster, safer, more affordable, transparent, and fully integrated to support trade and financial inclusion,” she said during a forum in September 2023.