Nine out of 21 countries are currently live on the COMESA Regional Payment and Settlement System (REPSS) since it was launched some six years ago. The value of transactions processed on the system has however been increasing, a sign that the platform is steadily being accepted in the regional trade bloc.
Secretary General Chileshe Kapwepwe has stated that implementation of REPSS is a great milestone in COMESA’s quest to achieve regional economic integration and all Member States need to get on board. Once fully operational, REPSS is expected to significantly contribute to the expansion of intra-COMESA trade by facilitating online payments of all intra-COMESA transactions.
This move is expected to foster a reduction in transaction and operational costs and bring about a switching of relationships for trade transactions from between commercial banks and foreign correspondents to commercial banks and central banks thus making intra-regional trade transactions cheaper.
“This system could also reduce the need for foreign exchange for intra-regional trade. I therefore would like to state with confidence that REPSS is a very important instrument to take lead as the preferred and strategic payment system under the Continental and Tripartite Free Trade Area arrangement,” said Ms Kapwepwe.
She was speaking in her address to the symposium for the COMESA Committee of Governors of Central Banks, organised by the COMESA Monetary Institute (CMI) to deliberate on the role of financial integration for the promotion of export competitiveness in the COMESA region. It was held virtually on 24th March 2022.
The meeting heard that among other positives, REPSS will also eliminate mistrust among traders as the Central Banks play a key role in the transactions. The system will also assist the region achieve Regional Financial Integration because it will bring about macroeconomic stability, financial system soundness, introduction of compliance with various international standards and practices in the financial sector to ensure regional harmonization and reforming the legal system to enable cross border enforceability of contracts.
Speaking at the same event, Governor of the Central Bank of Egypt, Tarek Amer said this year’s symposium was timely, because the trade and investment financing gap for Africa and for the COMESA region was very high estimated to be over USD$100 billion. He was represented by Dr. Naglaa Nozahie, who is the Governor’s Advisor on African Affairs at the Central Bank of Egypt.
Mr Amer said Regional Financial Integration has been identified as a key element in strengthening the financial sector and regional integration as it will induce foreign direct investments and development of physical infrastructure required for enhancing intra-regional trade.
The Bank Governor stressed that despite the enumerated benefits, achieving regional financial integration is constrained by differences in national legal regulatory and oversight regimes among the member countries and inadequate harmonization of national financial integration operating schemes as well as rules and technical standards.
“As you are aware, regional payment and settlement system is a powerful tool to enhance implementation of Regional Financial Integration. This will indeed contribute to increasing volume of trade among member countries by making trade transactions cheaper to use than that charged by correspondent banks,” He stated.
The Governors also held their 25th Meeting, which was the first Virtual Governors’ meeting since the outbreak of Covid-19.