njuguna ndung ’ u : enhancing the cross border payments system across the east african community remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the official launch of the east african payments system ( eaps ), nairobi, 16 may 2014. * * * dr. enos bukuku, deputy secretary general, east african community ; ms. mwanamaka a. mabruki, principal secretary, ministry of the east african affairs, commerce and tourism ; fellow governors : prof. benno ndulu, governor, bank of tanzania ; hon. john rwangombwa, governor, national bank of rwanda ; mr. jean ciza, governor, bank of the republic of burundi ; dr. louis kasekende, deputy governor, bank of uganda ; distinguished guests and colleagues ; ladies and gentlemen : on behalf of my fellow governors from the eac central banks, it is my great pleasure to welcome you all to the launch of the east african payments system ( eaps ). the eaps, which went live on monday 25th november 2013, is a cross border payment initiative by the eac central banks and the eac secretariat, working closely with commercial banks in the region. it is part of the east africa ’ s payments modernization efforts to enhance cross border payments system across the eac region. the system currently integrates with the respective real time gross settlement ( rtgs ) systems of kenya, uganda and tanzania that utilize the internationally recognized swift messaging network for safe and secure delivery of payment and settlement messages. it sends and receives cross border payments in the region ’ s currencies that is kenya shilling ( ksh ), tanzania shillings ( tzs ) and uganda shilling ( ugx ) from any of the commercial banks in the three east african countries on a real time basis for the region ’ s business community. eaps will therefore enable the public to pay as well as receive payments on real time basis. as such, its implementation will address deficiencies in the current cross - border payment methods, through enhanced efficiency and risk controls. all the commercial banks in kenya, tanzania and uganda are participants in the system. commercial banks in rwanda and burundi are expected to join later in the year. with respect to regional trade, the system is expected to promote, facilitate and support trade within the eac region. in this regard, eaps has many benefits, they include : • real time

allocates project risks among participants. such risks should be well - mitigated at the outset to make projects bankable. thirdly, participation in infrastructure projects by banks would also be constrained by legal and prudential limits on the proportion of banks ’ lending as a share of their core capital. given the considerable financial outlays involved in infrastructure projects, commercial banks would need to enhance their capital base to participate in ppps while remaining compliant with regulatory requirements. finally, given the increased investments in infrastructure and the environmental implications, i do hope that the studies lined up for discussion in this conference will give consideration to the green economy ( green growth ) aspects. this proactive discussion by the kenyan banking industry will no doubt contribute towards adopting sustainable finance principles as per the commitments of the addis ababa financing for development summit earlier mentioned. in view of the large size, huge cost and complexity of infrastructure projects, i would urge banks and other financial institutions to build the requisite legal and technical capacities to evaluate the value for money of ppps relative to traditional asset classes. this will assist in identifying the potential risks and the risk mitigation to be put in place in advance before the commitments are undertaken. i take that the engagement you will have for the next two days will be an on - going conversation and the research work arising from this conference ’ s theme will inform future research in the area. i am optimistic that the banking industry will continue to play an important role in supporting the various sectors of the economy and in particular, the challenge to address the nation ’ s infrastructure gap. the central bank is committed to creating an enabling regulatory environment that facilitates the banking sector to effectively execute its intermediation function. with those remarks, it is my honour to declare the 4th kba annual banking research conference officially open. i wish you fruitful deliberations. thank you. bis central bankers ’ speeches