Comesa to launch secure money transfer

By John Oyuke

Trade within the Common Market for East and Central Africa (Comesa) region will become easier as the trading bloc considers a new money transfer system.

Comesa Clearing House Executive Secretary, Dr Kambo Mweyana said the bloc will launch the single Regional Payment and Settlement System (REPSS) by the end of May, this year.

He said the system will reduce the time, and taxation investors incur while routing money transfers in the region through US and western European banks.

"It will also reduce interest accruing from transactions like those on overdrafts," he added in a statement.

The system will see the business of clearing money conducted between 24 to 48 hours while the tax will range from 1 per cent to 4 per cent on the total amount transferred as opposed to international charges that go up to 10 per cent.

In addition, the money transacted will remain within the region since transactions will go through each country’s Central Bank (CB).

The CB’s will be linked to a central REPSS clearing house whose headquarter is at the CB of Mauritius with back ups in South Africa and Zimbabwe. Mweyana said money transfers would be through SWIFT and extensible markup language (XML) standards.

He said the system would be much secure in the current economic meltdown occasioned by poor management of savings in western banks.

Secure system

"It is guaranteed by the central banks. You cannot get any more security than that provided by the bank," he assured.

The current system requires players in the Comesa region to use US central banks, which affects them due to geographical factors such as time zones.

"Whereas the farthest distance in the region is a difference of about three hours, the difference between the bloc and the US is minus seven hours," he pointed out. "When business open here, they are closed and when we close, they are open.

Transaction time could take one as long as a week to receive payment which results in increased transaction cost, interest rates and so on," said Mweyane.

The Comesa clearing house council approved the new system during the 16th meeting (in Lusaka) in December 2-3, 2003. According to the Council, the money transfer system could have been operational by 2005, as set out in its action plan.

The clearing house would support member states in liberalising trade, promotion of monetary co-operation and closer relations among banks in the region.