Kenya and Rwanda have agreed to introduce a shared licensing system for payment firms, a move aimed at reducing regulatory barriers, cutting costs and accelerating the expansion of digital financial services across borders.
The agreement, signed by the Central Bank of Kenya and the National Bank of Rwanda, will establish a “license passport” framework allowing payment service providers (PSPs) authorised in one country to operate in the other without undergoing a full approval process.
Under the current system, firms seeking to expand regionally must navigate separate licensing regimes in each market, even where regulatory requirements are broadly similar. This duplication has long been cited by industry players as a major barrier to scaling digital financial services in East Africa.
The proposed framework will rely on mutual recognition of licenses, enabling faster market entry while maintaining regulatory oversight. Both central banks said the initiative is designed to streamline compliance procedures without compromising financial stability or consumer protection.
“The objective is to address fragmentation in the regulatory environment and support the responsible expansion of payment service providers,” the Kenyan central bank said in a statement.
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The move reflects growing efforts to harmonise financial regulations across the region and deepen economic integration. Kenya and Rwanda are among East Africa’s most dynamic digital finance markets, with high mobile money usage and a rapidly expanding fintech ecosystem.
Analysts say reducing administrative hurdles could unlock new opportunities for fintech companies, allowing them to scale more efficiently and reach a broader customer base. It could also intensify competition, potentially lowering costs and improving service quality for users.
The agreement comes as trade between the two countries continues to rise. Bilateral goods trade reached $315 million in 2024, up from US$302 million the previous year, according to United Nations Comtrade data. Easier cross-border payments are expected to further support this growth by facilitating transactions for businesses and consumers.
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Monetary authorities also see the initiative as a way to boost financial inclusion. By enabling payment firms to operate seamlessly across borders, the framework could expand access to digital financial services, particularly for small businesses and underserved populations.
The project forms part of a broader regional push under the East African Community to improve interoperability and integration of payment systems. In May 2025, the bloc adopted a cross-border payments master plan aimed at creating a more unified and efficient financial ecosystem.
Experts note that successful implementation will depend on close coordination between regulators, including alignment on supervisory standards, risk management and consumer protection rules. Differences in legal frameworks and operational practices could pose challenges if not carefully managed.
Nevertheless, the initiative marks a significant step toward reducing fragmentation in East Africa’s financial landscape. By allowing firms to “passport” their licenses across borders, Kenya and Rwanda are setting a precedent that could be replicated across the region.
If extended to other member states, such arrangements could pave the way for a truly integrated payments market, lowering transaction costs, enhancing financial connectivity and supporting trade and investment flows.
For fintech firms, the agreement offers the prospect of faster expansion and reduced compliance burdens. For policymakers, it represents another building block in the effort to create a more seamless and inclusive regional economy.
