East African Community Moves to Cut US Dollar Reliance with New Payment System

East African Community (EAC) member states are actively working to minimize their dependence on the United States dollar by advancing an integrated regional payment and settlement framework.

During a parliamentary plenary session, the First Deputy Prime Minister and Minister for EAC Affairs, Rebecca Kadaga, explained that the initiative aims to slash the cost of doing business while laying the groundwork for the upcoming East African Monetary Union and a single currency.

The core of this regional push is the East African Payment System (EAPS). This mechanism connects national Real-Time Gross Settlement systems across Uganda, Kenya, Tanzania, and Rwanda, allowing commercial banks to conduct secure cross-border transactions using local currencies.

However, full integration remains a work in progress as nations like Burundi, South Sudan, the Democratic Republic of Congo, and Somalia are not yet fully connected. To bridge this gap, the EAC adopted a Cross-Border Payment System Masterplan in 2025 to harmonize licensing, modernize infrastructure, and promote the use of domestic currencies.

While lawmakers welcomed the development, challenges remain. Shadow Minister for EAC Hakim Kizza pointed out that liquidity shortages still force many traders to rely on double conversions through the US dollar, generating steep fees for commercial banks. He urged the government to establish a central bank-backed liquidity facility to ensure continuous availability of regional currencies.

Speaker Jacob Marksons Oboth emphasized the need for regular updates regarding regional integration and public awareness campaigns to keep citizens informed of the bloc’s progress and ongoing economic initiatives.

Read more details on the Parliament of Uganda.