Malawi has not lived up to its commitment to roll out the Common Market for Eastern and Southern Africa (Comesa) Regional Electronic Payment and Settlement System (Repss) by December this year.
In an interview on Sunday, Reserve Bank of Malawi (RBM) spokesperson Ralph Tseka said Malawi has made some progress, but it was yet to connect to commercial banks.
“The system has dragged because Comesa delayed in providing information to our commercial banks.
“But Comesa officials are coming to Malawi in February to conduct a workshop with commercial banks, thereafter, the system will go live,” said Tseka.
He said the central bank has already opened two accounts—one in US dollar and another one in Euros—in readiness for the roll out of the system.
Tseka said the only thing remaining is to connect commercial banks to the central bank.
In October this year, RBM was one of the central banks in the region that pledged to roll out Repss by December 2012 in a bid to promote regional integration and reduce costs related to international trade.
Under Repss which started in October this year with Rwanda and Mauritius as first members, importers and exporters will be deal with their local banks in as far as documentation and making payments is concerned.
Payments will be coordinated by Comesa central banks that are interlinked through software housed and run by the Mauritius central bank which is currently working as a clearing house.
Experts in the Finance and Monetary Affairs Committee of Comesa touted Repss at the regional bloc’s 18th meeting in Kigali, Rwanda, as key in unlocking deeper inter-regional trade.
During the meeting, it was noted that if all Comesa members subscribe to Repss, costs related to international trade will be reduced to under one percent from the current five percent.
This will automatically increase trade among Comesa members.
The Kigali meeting also observed that one of major challenge Africa has to deal with is slow, inefficient and costly cross border trade payments systems.
Currently, it takes up to five days to transfer funds from one country to another.
The current system engages a lot of banks in costly and cumbersome payment systems which in extreme cases charge businesses transfer fees amounting to 10 percent of their total trade deal.
Last year at the 17th meeting of Comesa Committee of Governors of Central Banks held in November 2011 in Swaziland, governors urged members who were yet to sign various agreements and pre-funded their settlement accounts to do so expeditiously.
It was also noted that the absence of secure and reliable payment system in the region was a major challenge to the development of the Comesa market.
Cross-border payments, especially in Africa, are slow, inefficient and costly for businesses.
Most cross-border trade payments are currently handled through overseas correspondent banking relationships, whereby a number of banks and domestic payment systems are linked to move funds from one Comesa country to another.
Apart from reducing costs of international trade, Repss also guarantees prompt payment to exporters.