COMESA seeks to harmonise digital payment for MSMEs

The business council of the Common Market for Eastern and Southern Africa (COMESA) is working to develop “affordable” solutions that will increase intra-trade and financial flows for Micro Small and Medium-sized Enterprises (MSMEs).

This was stressed on Tuesday, October 13, as this institution representing interests of the private sector at a regional level convened, virtually, a financial services regulators sub-regional stakeholder meeting.


“Among the challenges impacting industry competitiveness, is the lack of an affordable and effective platform which accommodates digital cross-border payments by SMEs," said Sandra Uwera, Chief Executive Officer of the COMESA Business Council (CBC).


According to Uwera, to address this challenge, CBC’s Digital Financial Inclusion programme, piloted in nine countries, including Rwanda, is expected to catalyse the transition of MSMEs from a cash-dominant to a cash-lite economy, where they have access to affordable, interoperable, secure, and real-time digital financial transactions.” 


Other pilot countries are Egypt, Ethiopia, Kenya, Malawi, Mauritius, Tanzania, Uganda and Zambia.

Tuesday's meeting is the last in a series of six such sub-regional sectoral meetings convened over the last month. 

They brought together MSMEs, mobile network operators, ICT regulators, commercial banks and microfinance institutions, and non-bank operators.

According to Amb Kipyego Cheluget, COMESA Assistant Secretary General in charge of programmes, the Covid-19 pandemic has pressed a reset button on how businesses trade with each other.

Cheluget said: "Digitisation lies at the centre of all aspects of social-economic growth, market sustainability and our ability to create borderless territories that are efficient and effective." 

"Mobile payments and solutions are the future as they are inclusive and accommodative to MSMEs which make up 80 per cent of our economies."

Cross border markets provide an opportunity for SMEs to expand their enterprises, while simultaneously addressing unemployment and enhancing economic growth within the region, said Marday Venkatasamy, the chairperson of the CBC.

Statistically, Venkatasamy noted, MSMEs employ 70 per cent of the total population, with a large proportion of these not connected to online e-commerce platforms and lacking the technical skills to use digital infrastructure. 

Venkatasamy added: "In view of this development, MSMEs need access to buyers, information on products, pricing knowledge, standards requirements, real time payments and buyer-seller relationships that are sustainable.

"This can only be achieved through reliable and secured e-commerce platforms which can facilitate marketing of various products and payments of the same." 

COMESA, the largest trade bloc on the continent, is a market with a population of 583 million people, covering a geographical area of 12 million square kilometres. 

As of 2019, the bloc exported goods worth $112 billion, imported goods worth $212 billion, and had a trade deficit of $76 billion.

Intra-COMESA exports were worth $10.9 billion, and intra-COMESA imports were worth $11.2 billion. Total intra-COMESA trade stood at $22.1billion. 

As noted, the region has a prosperous market that can effectively lead in agricultural trade, manufacturing and professional services.

But its logistical, transport and trade facilitation mechanisms still require concerted and collaborative efforts to ensure that goods and services move freely in regional markets before they can effectively reach global markets. 

"If there is anything the pandemic has taught us is that we need to strengthen our value chains and supply chains across borders. We need to create affordable, transparent channels that support commerce amongst trading partners," Cheluget said. 

She added that: "We also need to open the floor for SMEs who are primarily driven by women and youth to effectively move from informal markets into territories that allow them to grow, prosper and become sustainable." 

One of the biggest challenges in achieving these goals is financial inclusion, she noted, pointing to the fact that to date, the average cross border trader still carries cash at hand, and fears to trade beyond borders citing insecurity, border harassments and a lack of trust before accessing their products. 

"Digital payments can bridge this gap by opening avenues of affordable price negotiations, strengthened business to business partnerships and increased government revenues by bringing this market segment into the tax base," Cheluget said. 

The CBC has been implementing the digital financial inclusion program to support the design, development and deployment of an integrated digital financial services infrastructure that is low-cost, interoperable and fraud-resistant, that serves micro small and medium-sized enterprises, particularly women and youth, at the bottom of the financial pyramid.

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