COMESA introduces cross-border payment and settlement system

The Common Market for Eastern and Southern Africa (COMESA) has introduced a new cross-border regional payment and settlement system that allows the member countries to make payments easier to each other. The central banks will direct payments at the request of importers’ and exporters’ local commercial banks.

 Mr Mahmood Mansoor, COMESA clearing house chief technical advisor, has provided highlights of the way the system operates. According to him, the local commercial banks will provide the central banks with foreign currency on behalf of the importers. The amount provided to the central bank is then used to make the payment upon successful transaction.

 The new system is aimed at eliminating mistrust among traders as the process obtaining letters of credit can now be disregarded. Prior to the transactions, the central banks are responsible to check whether the commercial bank has sufficient foreign currency on the accounts of the importers. The COMESA clearing house provides daily exchange rates for the commercials banks to use.

 Source: Sunday News