February 26, 2025
Ghana and Rwanda have launched the continent’s first License Passporting Framework, which sets the tone for regulatory harmonization between the two countries and eliminates duplicative licensing requirement for cross-border transaction.
License passporting is a system that allows financial technology (Fintech) firms to operate in multiple countries with just a single license acquired in just one country. So, for instance, if a financial institution gets a particular license in Ghana, they can transact business in Rwanda with the same license without having to go get a similar license in Rwanda.
This system works perfectly in Europe, among the EU member states. But in Africa, cross-border transactions have not boomed because, due to the vast differences in regulations, financial institutions and fintechs are often required to get licenses in each country, and obtaining those licenses often takes years.
Fintechs in Africa have always said that they are ready to do cross-border transactions, but lack of regulatory harmony and its attendant multiple licensing regimes has always been the stumbling block. Some players call it “the tyranny of regulatory sovereignty”.
This initiative between Ghana and Rwanda will therefore eliminate that critical regulatory hurdle and drive regulatory harmonization, which will then help to streamline cross-border trade, enhance financial inclusion, and drive economic growth across Africa.
Supported by the NextGen Digital Public Infrastructure Framework and key partners such as the Global Finance & Technology Network, the Pan-African Payment & Settlement System (PAPSS), and most importantly, the central banks of the two countries, the initiative marks a significant milestone in Africa’s journey toward regulatory harmonization and digital transformation.
The License Passporting Framework allows financial technology (fintech) companies licensed in one country to operate seamlessly in another, reducing regulatory barriers and fostering innovation.
The launch of the License Passporting Framework is a game-changer for Africa’s financial sector. By enabling fintech companies to expand their operations across borders with ease, the framework will unlock new opportunities for innovation, investment, and economic growth. It will also facilitate seamless cross-border payments, making it easier for businesses and individuals to conduct transactions across Africa.
“This initiative is a groundbreaking milestone for Africa’s financial ecosystem,” said Kwame Oppong, Director of FinTech and Innovation at the Bank of Ghana. “By reducing regulatory barriers and fostering collaboration, we are creating a more inclusive and integrated financial system that benefits all Africans.”
The License Passporting Framework is a key component of the NextGen Digital Public Infrastructure Framework, which aims to leverage digital technologies to drive financial inclusion and economic growth. By enabling fintech companies to operate across borders, the initiative will expand access to financial services, particularly for underserved and unbanked populations.
“Financial inclusion is at the heart of this initiative, “said a representative from the National Bank of Rwanda. “By creating a more integrated financial ecosystem, we are empowering individuals and businesses to participate in the digital economy and unlock new opportunities for growth.”
This initiative means Ghana and Rwanda are now taking concrete step in line with the broader efforts to enhance intra-African trade under the African Continental Free Trade Area (AfCFTA). Indeed, AfCFTA is headquartered in Ghana.
It is however important to note that for this initiative to yield success for intra-Africa trade, it will require strong regulatory coordination, widespread adoption by financial institutions, and long-term sustainability strategies across the continent.
Establishing the framework is a good first step. But is now time for stakeholders to focus on execution—ensuring the framework gains traction, addresses potential regulatory hurdles, and expands participation beyond Ghana and Rwanda.
Source: TechFocus24