Kiingi, Alice (The New Vision, Kampala) 2009-02-17
The Common Market for Eastern and Southern Africa (COMESA) has launched an efficient cross-border regional payment and settlement system that will allow for fast flow of goods in the region.
Importers and exporters in COMESA will deal with the local commercial banks, which then request their central banks to send payments on their behalf.
“The central bank does not use its foreign currency reserves to make settlements but instead the commercial bank sources for the foreign currency on the market on behalf of the importer”, explained Mahmood Mansoor, chief technical advisor for COMESA clearing house.
“Once this is done, the commercial bank will send the payment directly to the central bank’s dollar account held at the Bank of Mauritius (COMESA clearing house). This amount is used for payment when the transaction is successful”, he said.
Mansoor highlighted that the system will eliminate mistrust amongst traders because of the central bank’s involvement. “This in turn increases trade in the region and also reduces the tedious production of letters of credit to prove ability to pay for the goods before the consignment is made”, he argued.
Central banks should ensure that funds are available on the accounts of the importers in the commercial banks prior to processing the transaction, he said. He also urged commercial banks to use the agreed daily exchange rate obtained from the COMESA clearing house.
Executive Secretary of COMESA clearing house Dr Kombo Moyana disclosed that there is no risk of transacting business with countries like Zimbabwe, with high monetary inflation, under the scheme. This is because the transactions are done only in euro and dollar currencies, he explained.