Kenya, Rwanda Sign Deal to Simplify Cross-Border Payments for PSPs

The Central Bank of Kenya (CBK) and the National Bank of Rwanda (NBR) have signed a memorandum of understanding (MoU) to create a licence passporting framework that will allow payment service providers (PSPs) licensed in one country to operate more easily in the other.

The agreement, signed on the sidelines of the Inclusive FinTech Forum in Kigali, aims to eliminate duplicative regulatory processes that have forced payment firms to repeat nearly identical licensing procedures when entering neighbouring markets.

Payment service providers seeking to operate regionally currently must navigate multiple licensing regimes despite substantial similarities in regulatory requirements across different countries, according to Central Bank of Kenya Deputy Governor Gerald Nyaoma Arita.

“This fragmentation increases costs and slows the delivery of innovative solutions,” Arita said during the signing ceremony.

The passporting framework will be developed by a joint technical committee and is expected to allow payment companies licensed in Kenya to expand into Rwanda with fewer regulatory hurdles, while firms licensed in Rwanda will gain similar access to the Kenyan market.

Both regulators will maintain oversight of payment service providers operating within their respective financial systems through continued supervisory cooperation.

The initiative is anchored on the East African Community Cross-Border Payment System Masterplan, approved in May 2025 to accelerate payment system interoperability across the region. A key priority under the masterplan is the development of mutual recognition frameworks for licensing payment service providers in partner states.

Arita noted that the agreement was concluded in less than one year, describing it as a significant milestone for regional financial integration.

Cooperation between the two central banks dates back to 2015, with the new agreement building on existing financial sector collaboration.

The move is expected to benefit fintech companies, mobile money operators, and other digital financial service providers seeking to scale across borders while promoting innovation and financial inclusion.

Trade between Kenya and Rwanda remains substantial, with Kenya exporting goods worth approximately KSh40 billion in 2024, positioning it among Rwanda’s top four import partners alongside China, India, and Tanzania.

An estimated 6,000 Kenyans live and work in Rwanda, while the Rwandan community in Kenya is estimated at around 100,000 individuals, including long-term residents, professionals, and business owners. Several Kenyan companies, particularly in banking and education, have established operations in Rwanda.

Arita pointed to global examples such as the European Union, where passporting frameworks allow licensed financial institutions to provide services across multiple member states, significantly expanding market access.

The agreement represents the first step toward broader regional integration, with the potential to serve as a blueprint for similar arrangements among other East African countries.

“The Central Bank of Kenya looks forward to continued collaboration with the National Bank of Rwanda as we work toward the prosperity of our people and position our economies as hubs for innovation and opportunity,” Arita said.

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