COMESA eases goods movement
Feb 15, 2009
THE Common Market for Eastern and Southern Africa (COMESA) has introduced an efficient cross-boarder payment system that allows fast flow of goods in the region.
By Alice Kiingi
THE Common Market for Eastern and Southern Africa (COMESA) has introduced an efficient cross-boarder payment system that allows fast flow of goods in the region.
The regional payment and settlement system allows prompt payment for goods.
Importers and exporters in the COMESA trading bloc deal with their local commercial bank which request their central banks to send payments on their behalf.
“The central bank does not use its foreign currency reserves to make settlements but instead the commercial bank sources for the foreign currency on the market on behalf of the importer,†Mahmood Mansoor, the chief technical advisor for COMESA clearing house, explained.
“Once this is done, the commercial bank will send the payment directly to the central bank’s dollar account held at the Bank of Mauritius (COMESA clearing house).
“This amount is used for payment when the transaction is successful,†he said.
Mansoor emphasised that the system eliminates mistrust among traders because of the central bank’s involvement.
“This in turn increases trade in the region and also reduces the tedious production of letters of credit to prove ability to pay for the goods before the consignment is made,†Monsoor argued.
Mansoor said the central banks should ensure that funds were available on the accounts of the importers in the commercial banks prior to processing the transaction.
He urged commercial banks to use the agreed daily exchange rate obtained from the COMESA clearing house.
Dr. Kombo Moyana, the executive secretary of COMESA clearing house, disclosed that under the scheme, there was no risk of transacting business with countries like Zimbabwe with high monetary inflation.
This, he explained, was because the transactions were done only in euro and dollar currencies.
THE Common Market for Eastern and Southern Africa (COMESA) has introduced an efficient cross-boarder payment system that allows fast flow of goods in the region.
The regional payment and settlement system allows prompt payment for goods.
Importers and exporters in the COMESA trading bloc deal with their local commercial bank which request their central banks to send payments on their behalf.
“The central bank does not use its foreign currency reserves to make settlements but instead the commercial bank sources for the foreign currency on the market on behalf of the importer,†Mahmood Mansoor, the chief technical advisor for COMESA clearing house, explained.
“Once this is done, the commercial bank will send the payment directly to the central bank’s dollar account held at the Bank of Mauritius (COMESA clearing house).
“This amount is used for payment when the transaction is successful,†he said.
Mansoor emphasised that the system eliminates mistrust among traders because of the central bank’s involvement.
“This in turn increases trade in the region and also reduces the tedious production of letters of credit to prove ability to pay for the goods before the consignment is made,†Monsoor argued.
Mansoor said the central banks should ensure that funds were available on the accounts of the importers in the commercial banks prior to processing the transaction.
He urged commercial banks to use the agreed daily exchange rate obtained from the COMESA clearing house.
Dr. Kombo Moyana, the executive secretary of COMESA clearing house, disclosed that under the scheme, there was no risk of transacting business with countries like Zimbabwe with high monetary inflation.
This, he explained, was because the transactions were done only in euro and dollar currencies.