The value of transactions processed on the Regional Payment and Settlement System (REPSS) has now crossed US$ 50 million with nine Central Banks in COMESA region using the system.
REPSS enables Member States to use local currencies in their intra-COMESA trade, hence importers and exporters deal with their local commercial banks for trade documentation. The importer’s payment to the exporter is then channeled through the Central Bank of the importer to the Central Bank of the exporter using the REPSS platform.
Presently, Central Banks of the following countries are live on the system: Democratic Republic of Congo, Egypt, Kenya, Malawi, Mauritius, Rwanda, Eswatini, Uganda and Zambia. Central Banks of Burundi, Djibouti, Madagascar, Sudan and Zimbabwe are expected to go live soon after completing ongoing internal processes and readiness aspects. Central Banks of Comoros, Ethiopia, Eritrea, Libya and Seychelles are also expected to start preparing for the REPSS.
By June, this year, the Central Bank of Kenya (CBK) accounted for 91% of the total value of US Dollar transactions while the Bank of Uganda (BoU) accounted for 80% of the value of Euro transactions. On volumes, CBK had sent the highest number of USD payments whilst the Bank of Mauritius had the highest Euro payments, at 53% of the total. The total value of transactions was 49 million US Dollars and one million Euros.
Briefing the 34th COMESA Trade and Customs Committee that met in Kenya last month, Executive Secretary of COMESA Clearing House Mr. Mahmood Mansoor outlined the key benefits of the REPSS as guaranteed and prompt payment for exports thus eliminating mistrust among traders owing to the involvement of Central Banks.
“This in turn increases trade within the region, reduces foreign funding as the amount to be paid at the end of the day by a participant is on a net basis and reduces collateral requirements as Central Banks are directly involved in the system and trade is mainly amongst members,” Mansoor told the delegates
He said the approximate totality of transactions carried out so far on REPSS have been without Letters of Credit.
“Based on an estimated amount of $49 million transacted and at an average cost of 5% of the value of these transactions which would have gone through Letters of Credit, the importers have already saved an estimated amount of over US$ 2.45 Million by channeling their payments through REPSS,” Mr. Mansoor explained.
Noting the success, of the successful operations of the REPSS, COMESA Heads of State and Governments, in their 2018 Summit in Zambia in July this year, urged all Member States to have their Intra-COMESA trade settled through REPSS. Further, they urged Central Banks that have not yet met the prerequisites for joining REPSS to do so in earnest.
The use of the REPSS is expected to generate resources for the COMESA Fund which will be used to leverage funding from cooperating partners for sustainable funding of regional integration programmes.
REPSS is currently transacting and settling in seven international currencies including the USD, Euro, Japanese Yen, British Pound, Swiss Franc, Chinese Renminbi and the Indian Rupee.