The Central Bank of Kenya (CBK) and the National Bank of Rwanda (NBR) have signed a Memorandum of Understanding (MoU) to develop a Licence Passporting Framework for Payment Service Providers (PSPs) between the two countries.
The agreement is designed to streamline regulatory processes and make it easier for licensed payment companies to expand operations across Kenya and Rwanda.
Reducing Regulatory Duplication
Under the proposed Licence Passporting Framework, regulators will work toward mutual recognition of licensing regimes for payment service providers operating in both jurisdictions.
This means companies licensed in one country could potentially operate in the other without undergoing duplicative licensing processes.
Currently, many financial technology firms and payment providers face the challenge of applying for separate licences in each country despite similar regulatory requirements.
The new framework aims to address this issue by simplifying cross-border expansion while maintaining strong regulatory oversight.
Supporting Regional Financial Integration
The initiative is part of broader efforts to deepen financial integration within the region.
It is anchored on the East African Community Cross-Border Payment System Masterplan, which outlines a roadmap for building a more integrated, efficient and inclusive regional payments ecosystem.
A key objective of the masterplan is the creation of a mutual recognition framework for payment service provider licensing among partner states.
Regulators say such reforms are necessary to overcome regulatory fragmentation that has historically limited the growth of cross-border payment services in East Africa.
Boost for Fintech and Digital Payments
By enabling easier expansion of licensed payment companies, the framework is expected to support the growth of fintech services and digital payments in both countries.
Payment service providers could benefit from:
- Faster market entry into neighbouring countries
- Reduced regulatory costs and administrative burdens
- Improved cross-border payment services for businesses and consumers
At the same time, regulators emphasised that supervisory cooperation between the two central banks will remain strong to ensure compliance and financial system stability.
Strengthening Regional Collaboration
The Central Bank of Kenya said the agreement reflects its commitment to strengthening regional partnerships and modernising the payments ecosystem.
By coordinating regulatory frameworks, the two institutions aim to support innovation in digital financial services while ensuring the payments infrastructure keeps pace with the evolving needs of businesses and consumers.
If successfully implemented, the licence passporting framework could also serve as a model for broader payment system integration across the East African region.
