Rwanda will soon put an end to the use of cheques, thanks to a new initiative by Central Bank of Rwanda to implement an Integrated Payments Processing System (RIPPS).

The project, funded by the World Bank, will see the usage of cheques reduced to minimal levels. It is funded through the Competitiveness and Enterprise Development Project (CEDP).

The new system involves Real Time Gross Settlement System (RTGS), an Automated Clearing House (ACH) and a Central Securities Depository (CSD). Officials also said that once implemented the National payment System (NPS) will conform to international standards.

It was revealed last week that the Central Bank contracted CMA Small Systems AB of Sweden (more information at: www.smallsystems.cma.se/content/23-12-2009-news) for the provision of RTGS, ACH and CSD solutions. As in its previous projects in Africa, CMA is partnering with a Uganda based company - AH Consulting, which is one of the leading African based consulting firms specializing in the provision of services to private and public sector organizations with specific emphasis on information systems, economic, financial management, human resource services and engineering consulting (more information at: www.ahcul.com).

RTGS is a funds transfer system where transfer of money takes place from one bank to another on real time and on individual basis. ACH is an arrangement where the banks agree to offset their obligations arising from the aggregate total of payment instruments that have been exchanged between their clients. CSD will act as a depository for all securities issued by both government and private equities traded at the Capital Markets Authority.

The Managing Director of CMA Small Systems, Mr. Alexey Nazarov said the project is not just an IT project but it will require institutions to make procedural changes to implement the system.

He noted that in the first four months after the signing, his company will install the initial configuration, training staff to guarantee maintenance in the five year program of the project.

“The project does not only allow quick transfer but also has efficient tools to manage risks and liquidity,” Nazarov said.

Mr. Herbert Rwamibazi, Managing Director of AH Consulting, CMA’s local partner in this project commented: “Like in other similar projects across Africa, AH Consulting is proud to partner with CMA on this important project to bring world class technology to Rwanda and to the region. Our local and regional technical expertise will work in tandem with international experts from CMA to support the implementation of the RIPPS ”.

Speaking at the signing ceremony, the Governor of the Central Bank Mr. Francois Kanimba said the project is a milestone in the process of modernization of the Rwandan payment systems.

“The system will improve the business environment, reduce cheque-handling costs and improve risk management” Mr. Kanimba said.

According to Kanimba, it used to take between four and five working days to clear a cheque and later reduced to two days. After the project systems are implemented, the process will take about 24 hours.

Kanimba said that the system will increase liquidity and the whole economy will benefit from increased speed and circulation of money in the banking system.