Thursday, February 19, 2009

Comesa’s clearing house to facilitate regional trade

Martin Luther Oketch - Daily Monitor - Kampala

Trade within the Common Market for Eastern and Southern Africa - Comesa – region is set for a smoother process as payment transactions will be centralized through a common clearing house based in Mauritius.

Central banks in all Comesa members are expected to facilitate payments for goods and services of respective traders by transferring payments under a new system called Reginald Payment and Settlement System (Repss).

The new system ensures safety, convenience and speed.
Under the Repss system all the central banks in the Comesa region will be hooked to Bank of Mauritius where the Comesa Clearing House (CCH) will be located. The local commercial banks will collect money from their clients who transfer it to the central bank who then send to other countries with the region.

“The Regional Payment and Settlement System is going be safe, secured, efficient and convenient for people living in the Comesa region in areas of trade and any other transaction,” Mr Elliot Mwebya, the director payment and settlement department Bank of Uganda, said.

He was speaking during a Comesa workshop at Grand Imperial Hotel recently.
The Comesa Clearing House will act as an agent of central banks at a fee of 0.25 per cent of the total charge.

Mr Mwebya said the system can be used by anyone to transfer money either for business or school fees. Commercial banks will have to deposit their clients’ money with the central bank before the transfer is implemented.

“We expect people to adapt to it, China, India and South Africa have expressed interest in using the system,” Mr Mwebya disclosed.

He said the benefits of the system will include an all round reduction in risk exposure, foreign funding, settlement transactions, foreign correspondent banking charges and reduction in settlement time period.

Comesa Clearing House was established in 1984 (as a PTA clearing house) to facilitate payment and settlements across boarder payments amongst Comesa states.

Economic reform and structural adjustment programmes in Comesa countries led to direct availability of forex and diminished use of CCH in the eighties, however, Comesa central bank governors lately, decided to restructure the clearing house to provide value added services to the region.

The value added facilities now includes: political risk guarantee scheme (multilateral agency (ATI), swift service bureau, regional payment and Settlement System and facilitation of monetary and fiscal policy harmonisation with the region.

The clearing house is also expected to support member states in liberalising trade through appropriate facilitation instruments; and promotion of monetary and financial co-operation among members states and closer relations among banks throughout the Comesa region. Comesa has a membership of 20 countries, Free Trade Area of 13 countries GDP at current prices $180 billion, per GDP $600 Intra-Comesa Trade $7.5 billion and external debt of $130 billion.