Current Regional Payment System Initiatives in COMESA
The Common Market of Eastern and Southern Africa (COMESA) is a regional bloc consisting of 21 countries with a total population of 520 million. The region has a significant intra-COMESA trade volume of $16.1 billion (2017). COMESA has established institutions like the COMESA Clearing House and is implementing initiatives such as the Regional Payment and Settlement System (REPSS) to enhance efficiency in trade payments and transactions among member states.
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Debrief on Current Regional Payment System Infrastructures or Initiatives on the Continent: Case of the Common Market of Eastern and Southern African (COMESA)
COMESA AT A GLANCE TOTAL AREA 12.8 MILLION SQ KM POPULATION 520 MILLION MEMBERSHIP 21 COUNTRIES FTA MEMBERSHIP 16 COUNTRIES INTRA-COMESA TRADE $ 16.1 BILLION (2017)
COMESA INSTITUTIONS TRADE AND DEVELOPMENT BANK COMESA CLEARING HOUSE COMESA COURT OF JUSTICE THE COMESA RE-INSURANCE COMPANY (ZEP-RE) AFRICAN TRADE INSURANCE AGENCY OFFERS POLITICAL RISK GUARANTEE LEATHER AND LEATHER PRODUCTS INSTITUTE COMESA REGIONAL INVESTMENT AGENCY COMESA FUND COMESA MONETARY INSTITUTE
INTRA-COMESA TRADE BY COUNTRY 2016-2017 (USD MILLIONS) Exports Imports Total Trade 2016 2017 2016 2017 2016 126.01 1,926.50 153.98 2,401.20 440.90 2,201.86 708.01 252.13 433.82 430.96 716.35 1,689.78 170.06 1,382.04 2,384.20 452.97 16,048.05 2017 134.92 1,043.87 114.11 2,099.61 142.48 515.44 2,555.90 493.02 317.79 339.81 371.45 881.44 1,640.45 217.32 1,716.68 3,103.30 394.56 16,157.56 44.03 7.41 904.62 18.10 1757.38 3.04 124.59 1516.39 91.90 77.39 153.62 229.92 354.50 11.13 814.90 156.48 801.46 873.84 88.99 8,029.70 42.97 3.38 706.73 81.98 10.50 1021.88 135.88 643.82 96.92 316.31 685.47 616.11 174.75 280.20 201.04 361.85 48.26 874.88 13.58 580.57 1510.36 363.98 8,018.35 91.95 7.12 337.14 114.09 561.31 137.13 314.19 1108.34 448.68 217.87 207.32 185.14 423.23 49.10 844.21 15.18 690.91 2181.98 308.58 8,243.48 Burundi Comoros Congo DR Djibouti Egypt Eritrea Ethiopia Kenya Libya Madagascar Malawi Mauritius Rwanda Seychelles Sudan Swaziland Uganda Zambia Zimbabwe 17.91 10.50 .02 1538.30 5.35 201.25 1447.56 44.34 99.92 132.48 186.31 458.21 15.80 796.24 202.15 1025.77 921.32 85.98 7,914.08 99.97 59.39 64.90
BACKGROUND The COMESA Clearing House (CCH) - established in 1984 (as the PTA Clearing House) Facilitation of the settlement of trade and services payments amongst Member States Liberalisation of markets CCH had to restructure its services to be more relevant
BACKGROUND cont.. Mandated to design and implement a Payments System - to reduce costs of regional transactions in a liberalised foreign exchange regime. The Regional Payment and Settlement System (REPSS), was designed by COMESA Central Banks Payments Experts, with inputs from the IMF and financial institutions of the region and with financial support from the EU.
COMESA CLEARING HOUSE REGIONAL PAYMENT & SETTLEMENT SYSTEM (REPSS)
REPSS OBJECTIVES STIMULATE ECONOMIC GROWTH THROUGH AN INCREASE IN INTRA-REGIONAL TRADE REDUCE COST AND DURATION OF CROSS BORDER TRANSACTIONS HOMEGROWN SOLUTION, OPERATED BY THE COMESA COUNTRIES SYSTEM IS RELIABLE, SECURE AND PREDICTABLE LOW INVESTMENT AND OPERATIONAL COSTS SETTLEMENT IN HARD CURRENCIES ($, )
REPSS FEATURES SYSTEM IS CENTRALLY LOCATED LOCAL BANKS TO ACCESS SYSTEM THROUGH CENTRAL BANKS PAYMENT SYSTEM LINKING CENTRAL BANKS PAYMENTS TO BE EFFECTED THROUGH CLEARING (NOT REAL TIME) PRINCIPLE OF CREDIT PUSH (PRE-FUNDED ACCOUNT) COMPLIANT WITH BIS CORE PRINCIPLES
Traditional Cross Border Payment T r a d e Correspondent fees Delays
REPSS Model T r a d e 7 T+0 T+1 T+0 REPSS
BENEFITS REDUCES NUMBER OF SETTLEMENT TRANSACTIONS REDUCES FOREIGN CORRESPONDENT BANKING CHARGES REDUCES COST OF INTRA-REGIONAL TRADE REDUCES SETTLEMENT TIME PERIOD GUARANTEES PROMPT PAYMENT TO EXPORTER BUILDS TRUST AMONG TRADERS SETTLEMENT FINALITY LEVELS PLAYING FIELD FOR COMMERCIAL BANKS EVENTUALLY ALLOWS TRADE ON OPEN ACCOUNT
ROLES AND RESPONSIBILITIES ROLE OF CCH PROVIDE THE PAYMENT AND SETTLEMENT SERVICES TO THE PARTICIPANT ENSURE THE ON-GOING STABILITY, OPERATIONAL CAPABILITY AND EFFICIENCY OF REPSS DISCHARGE AND CLEAR THE BANK S PAYMENT OBLIGATIONS TO OTHER PARTICIPANTS
ROLE OF SETTLEMENT BANK HOLD ACCOUNTS OF THE PARTICIPANTS IN ITS BOOKS CARRY OUT SETTLEMENT SERVICES FOR REPSS SEND END OF DAY SETTLEMENT REPORTS TO PARTICIPANTS NOTIFY CCH ABOUT CHANGES IN THE BALANCES OF PARTICIPANTS CARRY OUT FUND TRANSFER TO/ON BEHALF OF THE PARTICIPANTS SEND DAILY/MONTHLY STATEMENTS TO PARTICIPANTS
ROLE OF PARTICIPANT SEND PAYMENTS TO REPSS FROM COMMERCIAL BANKS PRESERVE AND ASSURE THE PRIVACY AND CONFIDENTIALITY OF THE DATA AND INFORMATION RELATED TO TRANSACTIONS PROVIDE INFORMATION TO CCH FOR THE SMOOTH DAY TO DAY RUNNING OF REPSS. ENSURE THAT THEIR ACCOUNTS ARE ADEQUATELY FUNDED PRIOR TO SENDING PAYMENTS ENSURE THAT REPSS OPERATIONS ARE NOT DELAYED
LEGAL FOUNDATION JURISDICTION COMESA COURT OF JUSTICE AGREEMENT BETWEEN BOM AND CCH AGREEMENT BETWEEN CCH AND PARTICIPANT AGREEMENT BETWEEN BOM AND PARTICIPANT
COMESA HEADS OF STATE AND GOVERNMENT SUPPORT TO REPSS COMESA HEADS OF STATE AND GOVERNMENT HAVE: HIGHLY COMMENDED COMESA CENTRAL BANK GOVERNORS FOR THE SETTING UP REPSS, WHICH WILL GREATLY ASSIST IN EXPANDING INTRA- REGIONAL TRADE; URGED OTHER CENTRAL BANKS TO EXPEDITE THEIR GOING LIVE ON REPSS AND AGGRESSIVELY PROMOTE THIS FACILITY; AND URGED ALL COMMERCIAL BANKS AND STAKEHOLDERS TO MAKE FULL USE OF THE SYSTEM FOR THE BENEFIT OF OUR ECONOMIES AND THE REGION AT LARGE.
CURRENT STATUS OF REPSS 9 COUNTRIES ARE LIVE ON REPSS: EGYPT, DRC, KENYA, MALAWI, MAURITIUS, RWANDA, eSWATINI, UGANDA AND ZAMBIA TRANSACTIONS ON REPSS IN 2018 OVER USD44 MILLION, AND NEARLY USD13 MILLION JAN MAR 2019 MORE CENTRAL BANKS JOINING REPSS AND WITH INCREASED INTRA COMESA TRADE GREATER USE OF REPSS AND MORE TRADE.
