The Common Market for Eastern and Southern Africa (COMESA) is set to launch a digital retail payment platform pilot programme in Malawi and Zambia. This initiative aims to facilitate cross-border trade using local currencies. The platform, developed by the COMESA Clearing House, is an instant, low-cost cross-border retail payment system. It is nearing its Friendly User Trials stage, ahead of live transactions between the two countries.
The Assistant Secretary General of COMESA, Dev Haman, highlighted that one of the fundamental constraints to expanding Intra-COMESA trade is the high cost, complexity, and inefficiency associated with cross-border payments. He emphasized that a fully integrated common market needs more than the removal of trade barriers. The COMESA Committee of Governors of Central Banks is currently meeting in Lilongwe for its 46th Bureau meeting.
The meeting, hosted by the Reserve Bank of Malawi, brings together policymakers to discuss regional integration and monetary cooperation. The Bureau provides oversight and policy guidance to COMESA's specialized monetary institutions, including the COMESA Clearing House and the COMESA Monetary Institute. These institutions play a crucial role in promoting economic integration among member states.
Malawi's Finance Minister, Joseph Mwanamvekha, stressed the importance of trading in local currencies, eliminating the need for dollars in regional transactions. He cited the Regional Payment and Settlement System (REPSS) as a key solution, allowing nations to trade in their respective currencies. REPSS and the digital retail payment platform are vital in facilitating faster, more affordable cross-border payments.
Mwanamvekha also emphasized the need for policy and regulatory responsiveness, as the systems may introduce emerging risks such as cyber-attacks. Currently, REPSS has nine participants and has settled 1333 transactions worth $98.2 million. The system is similar to the Pan-African Payment and Settlement System, championed by the African Continental Free Trade Area secretariat.
The digital retail payment platform is expected to enhance regional integration and promote economic growth. By reducing transaction costs and increasing efficiency, the platform can increase trade volumes and foster economic cooperation among COMESA member states. The pilot programme in Malawi and Zambia will serve as a testbed for the platform's implementation in other member states.
The successful implementation of the digital retail payment platform can have far-reaching implications for regional trade and economic integration. As the platform nears its launch, stakeholders are optimistic about its potential to transform the way countries in the region conduct cross-border transactions. The platform's impact will be closely monitored, and its success could pave the way for wider adoption.
Key points
- The COMESA digital retail payment platform will enable cross-border trade in local currencies, reducing transaction costs and increasing efficiency.
- The platform is nearing its Friendly User Trials stage, ahead of live transactions between Malawi and Zambia.
- The Regional Payment and Settlement System (REPSS) has settled 1333 transactions worth $98.2 million among its nine participants.
