The Common Market for Eastern and Southern Africa (COMESA) has introduced a digital payments system aimed at reducing transaction costs by enabling businesses to settle transactions in local currencies. Announced on Thursday, this initiative marks a significant step for the continent in promoting local currency payment systems to lower trade expenses by eliminating the need to convert local currencies into widely used hard currencies, primarily the U.S. dollar, for cross-border transactions.
The new platform, called the Digital Retail Payments Platform, will begin with trial runs between Malawi and Zambia, as stated by COMESA. The rollout is being conducted in collaboration with two digital financial service providers and a foreign exchange provider, although the specific partners have not been disclosed.
“This is the first time cross-border trade within COMESA can be settled directly in local currencies,” said Kenya’s Trade Minister Lee Kinyanjui. “This is truly a game-changer.” The initiative is designed to support medium, small, and micro enterprises, which represent 80 percent of businesses and 60 percent of employment within the member states. These enterprises often face “cumbersome, insecure, and expensive” challenges with current cross-border payment systems, he noted. “We are showcasing how traders can exchange value seamlessly without depending on scarce foreign currency,” he added.
The payments platform aims to keep transaction costs under 3 percent of the total transaction value. Kenya’s President William Ruto, who recently took over the chairmanship of COMESA from his counterpart in Burundi, emphasized the need for greater integration to enhance trade. He announced that Kenya had increased its investments in regional trade finance institutions, TDB and Afreximbank, by $100 million and $50 million, respectively, demonstrating its commitment to deepening trade integration. “Strengthening our home-grown multilateral financial institutions is one of the most promising pathways for Africa and regional blocs like COMESA,” he stated.
