Zim lags behind in Comesa payment system

Harare Bureau
Zimbabwe is still lagging behind in terms of using the Comesa regional payment system since it went live in 2012 while eight member states have since joined enhancing easier transfer of funds within the regional economic bloc.

The regional payment system was introduced by the Comesa Clearing House to facilitate the settlement of trade and services payments among Member States. It is driven by the respective central banks of the participating Member States.

REPSS started live operations in 2012 and registered its first transaction between Bramer Bank of Mauritius and Fina Bank of Rwanda which was a great milestone in Comesa’s quest to achieve regional economic integration.

“Eight member states are now using the regional payment and settlement system which allows easier transfer of funds within Comesa in conducting business. These are Democratic Republic of Congo, Kenya, Malawi, Mauritius, Rwanda, Swaziland, Uganda and Zambia.

“The Comesa Committee of Trade and Customs at its 31st meeting in Lusaka recommended that central and commercial banks should be proactive in marketing the REPSS to customers as a product,” said Comesa.

The regional economic body said between January and June this year there were a total of 54 transactions amounting to $1,690,387,26 while 11 transactions were conducted in Euros amounting to €63,656,71.

Comesa said some of the key benefits of using the REPSS platform are that it guarantees prompt payment for exports as well as other transfers.

The system eliminates mistrust among traders as there is central bank involvement. This in turn is expected to increase trade within the region.

“The REPSS allows regional trade transactions using local currencies thus reducing dependency on United States Dollar and Euro. This cuts on collateral requirements as central banks are directly involved in the system and trade is mainly among members.

“Under the system, the importer’s payment to the exporter is channeled through the Central Bank of the exporter using the REPSS platform. Hence importers and exporters deal with their local commercial banks for trade documentation.

“The credibility of the central banks and pre-funding of the account by commercial banks provide guarantee of payment,” said Comesa.

The system benefits exporters and importers in the region by allowing for a faster, safe and secure transfer of funds and eliminates the need for confirmed letters of credit and associated costs, with Central Banks guaranteeing payment through prefunding of commercial banks accounts held with the concerned Central Bank.

Comesa said the system also paves the way for trading on open account, the predominant method of payment within the EU and other parts of the world.

It is to be noted that while the cost of cross-border payment for Comesa’s intra-regional trade of $17,4 billion in 2010 has been estimated at $600 million, channeling such payments through REPSS would have saved the region a huge proportion of that cost.

Comesa is of the view that the absence of a secure and reliable payment infrastructure within the region has also been hampering further development of the market.

According to REPSS, importers and exporters deal with their local commercial banks for trade documentation. The commercial bank of the importer then makes a payment, for the benefit of the exporter, using the local payment infrastructure to the local Central Bank.

The Central Bank of the country of the importer transfers the funds to the Central Bank of the exporter using REPSS. The Central Bank of the exporter remits the funds to the beneficiary as a local payment.

REPSS operates on the basis of same day settlement in United States Dollar and Euros and beneficiaries receive money on the same day if the local payment infrastructures are automated.

The regional payment system also complements other payment solutions already in use in the region and will help integrate payment platforms to achieve Comesa’s vision of economic integration.

The system, which received funding from the EU under its contribution agreement with Comesa is run by the Comesa Clearing House headquartered in Harare.