CS/TCM/ebCBG/vii/8
Page 1
distr.
LIMITED
CS/TCM/BCBG/xxxi/5
August
Original: ENGLISH
common market for eastern
and southern africa
Thirty First Meeting of the Bureau of the COMESA
Committee of Governors of Central Banks
Domaine Les Pailles, Mauritius
4 August, 2010
tHIRTY fIRST mEETING OF THE bureau of the
COMESA Committee of Governors of Central Banks
A.INTRODUCTION
1.The Thirty First Meeting of the Bureau of the COMESA Committee of Governors of Central Banks was held on 4 August, 2010 in Mauritius.
B. ATTENDANCE, OPENING OF THE MEETING AND ADOPTION OF THE AGENDA AND ORGANISATION OF WORK
Attendance
2.The meeting was attended by Governors and delegates from Central Banks of Burundi,Egypt, Mauritius, Sudan, Swaziland, the COMESA Secretariat and the COMESA Clearing House. The list of participants is at Annex V of this report.
Opening of the Meeting (Agenda item 1)
3.In his opening statement, Mr. Rundheersing Bheenick, Governor of Bank of Mauritius and the Chairman of the Committee called the meeting to order andextended a very warm welcome to all fellow Governors and delegates present at the meeting.
Adoption of the Agenda and Organisation of Work (Agenda Item2)
4.The Bureau adopted the following agenda items:
- Welcoming remarks by the Chairman
- Adoption of the Agenda and Organization of Work
- Consideration of the Report of the Seventh Meeting of the Experts of the Bureau of the COMESA Committee of Governors of Central Banks on the following:
- Status Report on the implementation of the Regional Payment and Settlement System (REPSS);
- Audited Financial Statement of the COMESA Clearing House for the year ended 31st March 2009;
- Interim Accounts of the COMESA Clearing House for the period ended 31st March 2010;
- COMESA Clearing House Budget for the period April 2010 to March 2011;
- Status of implementation of the Decisions of the Fourteenth Meeting of the COMESA Committee of Governors of Central Banks; and
- Draft Agenda for the 15th Meeting of the COMESA Committee of Governors of Central Banks;
- Any Other Business;
- Adoption of the Report and Closure of the Meeting
5.TheBureauagreed on the following hours of work:
Morning: 10.30 -12.30 hours
Afternoon: 14.30 -15.30 hours
C.ACCOUNT OF PROCEEDINGS
Consideration of the Report of the Seventh Meeting of the Experts of the Bureau of the COMESA Committee of Governors of Central Banks
Status Report on the Implementation of the Regional Payment and Settlement System (REPSS) (Agenda Item3(a))
6.The Bureaunoted the report on the activities carried out by the COMESA Clearing House, as mandated by the COMESA Committee of Governors of Central Banks, at its Fourteenth Meeting held in Mauritius on 29 & 30 October 2009.
7.The Bureaurecalled that under the Regional Payment and Settlement System, either the exporter’s currency or any other currency agreed upon between the importer and the exporter is quoted on Letters of Credit (LCs); a single currency (US$ or EUR) is used for net settlement; a single nostro correspondent is used for the net settlement currency; the COMESA Clearing House acts as the agent of the Central Banks; bilateral limits (Net debit/Net Receiver) are set by each Central Bank at the Clearing House and each transaction is expressed in the settlement currency. Bilateral agreements between Central Banks are formulated that limits the amount of central bank exposure, to further ensure that settlement is a successful event each day.
8.Fees for the facility are assessed on a percentage basis. Initial charges for the system stand at 0.25 % (0.2% for CCH & 0.05% for the Central Bank) of the value of the transaction, with a minimum charge of US$ 20 or EUR equivalent. Each Central Bank decides, in consultation with COMESA Clearing House, on the upper limit of these charges based in individual market conditions.
9.REPSS (i) Guarantees prompt payment to the exporter - at the latest by the next day that the importer deposits the required amount at its Central Bank; (ii) Builds trust amongst traders that would lead to an increase in intra-regional trade; (iii) Drastically reduces the cost of making intra-regional trade transactions; (iv) Levels the playing field by getting all commercial banks to deal directly with one another, without having to go through banks outside the region; and (v) Eliminates the need for confirmed Letters of Credit and ultimately gets trade transactions to be effected on open accounts.
10.The Bureaunoted the current implementation of REPSS as follows:
(i)Live Bank Identifier Code(BIC) registration on the Closed User Group (CUG) are in place for the Central Banks of Kenya, Madagascar, Malawi, Mauritius, Rwanda, Swaziland and Zimbabwe. Live RMAs (Relationship Management Application that have replaced the former BKE – Bilateral Key Exchange) are also in place for the Central Banks of Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe;
(ii)Live and Test Environments have been set up to run in parallel to allow for those Central Banks that did not go through the First Test Pack to do so whilst the System operates in live mode;
(iii)Settlement Accounts have been created by the Settlement Bank (Bank of Mauritius) for all Central Banks that are members of the Clearing Housenamely: Burundi, Comoros, Djibouti, DR Congo, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Seychelles, Sudan, Swaziland, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe. These accounts will be activated immediately after signature of the agreement with the Settlement Bank and pre-fundingof the respective accounts;
(iv)Test runs in the live mode of operation have been carried out involving the Central Banks of Mauritius, Kenya, Swaziland and Madagascar;
(v)Agreements between (i) the Settlement Bank and each Central Bank; and (ii)) COMESA Clearing House and each Central Bank were resent to all Central Banks by the Chairman of the COMESA Committee of Governors of Central Banks. The following Member Countries have so far signed all the agreements: Comoros, Congo D.R., Malawi, Mauritius, Sudan, Swaziland, Uganda and Zambia;
(vi)REPSS will initially transact in US Dollars and Euros and it has also been agreed to include the following additional currencies at a later stage: UK Pounds (GBP), Switzerland Francs (CHF), Japanese Yen (JPY) and South African Rand (ZAR);
(vii)Following requests from the Central Banks of Egypt, Libya and Sudan for a rerun of the training sessions on REPSS, in view of new staff in their respective Payments and IT departments, these workshops were held at the Central Bank of Egypt for all concerned staff. Technical problems relating to logging in into REPSS, message exchanges and manual changing of credit limits were raised at the workshop by the Central Bank of Egypt. They are being addressed and sorted out by the Clearing House and the service providers;
(viii)With a view to further consolidating REPSS Operations and ensuring that the Central Bank of Egypt’s concerns are taken on board, the Clearing House SWIFT Bank Identifier Code (BIC) which was previously hosted at Fin-X/Bankserv in South Africa, has been successfully moved to the Bank of Mauritius;
(ix)In October 2009, CCH was invited to make presentations at the Africa-China Business Summit, held in Cape Town, where the benefits of REPSS were discussed as well as ways of using REPSS in trade payments across the two regions to the benefit of system users and in enhancing trade;
(x)At the recent COMESA mission to the United Arab Emirates in May 2010, it was suggested that the possibilities of integration of COMESA REPSS and UAE RTGS (RAPID) should be fully explored. The fast pace of developments in the trade and financial world makes it necessary to integrate payments systems across regions, not only to ensure that the systems meet the changing trade needs but also that their functionalities are harmonised. REPSS and RAPID are designed to ensure reliability and integrity of settlements as they are both regulated on the same core principles. Both systems have many similarities in terms of i) Settlement Finality ii) Operating platform and procedures iii) Risk Management principles and iv) Benefits to users and trade. A comparative analysis of the two systems has been carried out and the way forward for their interfacing recommended;
(xi)REPSS is being aggressively promoted in all Member States through Sensitisation Workshops organised by Central Banks and with the participation of commercial banks, exporters and importers and other stakeholders;
(xii)The Global Board of Trade (GBOT), an international multi-asset derivativeexchange,has indicated that its Clearing Banks will be using REPSS for funds transfer within COMESA; and
(xiii)The CEO of the Estate Agency Affairs Board of the Association of Real Estate License Law Officials (ARELLO) has shown interests in using REPSS for all property financial transactions within COMESA.
11.TheBureau also noted the status of implementation of REPSS, at national level, as follows:
Burundi
-Consultations are underway with the Clearing House for the holding of a sensitisation workshop on REPSS;
-Identification of initially two regional exporters and importers and their respective commercial banks will be undertaken after the sensitisation workshop and will be communicated to the Clearing House; and
-REPSS Legal Agreements have been sent to the Legal Department for review and will thereafter be signed;
D R Congo
-REPSS Legal Agreements have been signed;
- Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House
Egypt
-REPSS Legal Agreements have been reviewed and will be expeditiously signed once further tests have been conducted;
-Two regional exporters and importers and their respective commercial banks participated in the workshop held in Cairo and provided useful comments on the system;
Kenya
-The collective set of agreements has been forwarded and will be reviewed in preparation for expeditious execution;
-Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House
Libya
-REPSS Legal Agreements will be reviewed by the Legal Department and will be expeditiously signed;
-Identification of initially two regional exporters and importers and their respective commercial banks will be undertaken and will be communicated to the Clearing House; and
-2 representatives of the Central Bank of Libya were present at the workshop held in Cairo in March 2010
Madagascar
-Consultations are underway with the Clearing House for the holding of a sensitisation workshop on REPSS at an appropriate date;
-Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House; and
-The collective set of agreements have been forwarded and are being reviewed in preparation for expeditious execution.
Malawi
-Signed an agreement with COMESA Clearing House and an MOU with the Bank of Mauritius which is acting as a settlement bank for the system. However, in order to strengthen the contractual arrangement, Bank of Mauritius has sent an agreement which is being vetted by RBM’s Legal Affairs Department;
- Participated in two tests among a series of tests which COMESA Clearing House conducted;
-In March 2009, RBM in conjunction with COMESA Clearing House officials conducted a sensitization workshop involving treasury managers from commercial banks and officials from the Ministry of Industry and Trade;
-In June 2009, RBM held a meeting with commercial banks where a Task Force, whose membership comprises of RBM and commercial banks officials, was formed for ease of correspondence and handling other system sensitization/awareness related issues; and
-RBM has identified two exporters and two importers involved in intra-regional trade whose payments will be processed in REPSS.
Mauritius
-All agreements and accounts are in place for live operations; and
-Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House.
Rwanda
-REPSS Legal Agreements have been signed;
-Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House; and
-Consultations are underway with the Clearing House for the holding of a sensitisation workshop on REPSS at an appropriate date.
Seychelles
-Is currently focussing on the modernisation of the national payments system;
-Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House; and
-Consultations are underway with the Clearing House for the holding of a sensitisation workshop on REPSS.
Sudan
-REPSS Legal Agreements have been signed; and
-Identification of initially two regional exporters and importers and their respective commercial banks has been undertaken and communicated to the Clearing House.
Swaziland
-REPSS Legal Agreements have been signed;
-Swaziland is at testing stage – tested with three Banks and has requested for another review visit in August from the Clearing House;
-Had already opened an account with the Settlement Bank;
-Back home have engaged commercial banks to get their buy in; and
-Developed Draft Rules between the Central Bank and the Commercial Banks.
Uganda
-REPSS Legal Agreements have been signed; and
-Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House
Zambia
-REPSS Legal Agreements have been signed; and
-Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House
Zimbabwe
-REPSS Legal Agreements are being reviewed by the Legal Department and will be expeditiously signed; and
-Identification of initially two regional exporters and importers and their respective commercial banks is being undertaken and will be communicated to the Clearing House.
12.Progress Report from the following countries have been requested: Comoros, Djibouti, Eritrea, Ethiopia and Tanzania.
13.The Bureautook note of the following activities that are either ongoing or will be undertaken during the period August 2010 – March 2011:
(i)AggressiveMarketing of REPSS in the region – Ongoing
(ii)Promoting REPSS with major traders, commercial and merchant banks and trade financing institutions of the region – Ongoing
(iii)Follow up on opening of Settlement Accounts at Bank of Mauritius and signing of agreements – Ongoing
(iv)Operating of REPSS in Live Mode with the Central Banks of Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Sudan, Swaziland and Zambia – September 2010
(v)Holding of REPSS Stakeholders Meetings at Central Banks for Progress Review – October to December 2010
(vi)Holding of Workshops for all Central Banks for REPSS Progress Review and System Enhancements – November 2010 and March 2011
(vii)Holding of Sensitisation Workshops at National Levels - Ongoing
(viii)Off- site support to Central Banks – Ongoing
(ix)Holding of REPSS Post-Live Stakeholders Meetings at Central Banks for Progress Review – August to December 2010
(x)Updating of COMESA Website on CCH and REPSS Activities and providing links into CCH from participating Central Banks Websites - Ongoing
Discussions
14.The Bureau expressed concerns on the proposed fee structure under which each Central Bank was requested, in consultation with the Clearing House, to fix an upper limit for charges based on individual market conditions.
15.The Clearing House explained that in view of different market conditions and charges currently levied by Commercial Banks in Member States, it was proposed that for direct money transfers an upper limit be decided for each central bank, after consultations carried out by the Clearing House.
16.With regards to the elimination of the need for confirmed letters of credit, the Bureau recalled that under REPSS, the requirement by the exporter for confirmation of the letter of credit by a first class International Bank would fall away as Central Banks are directly involved in REPSS and provide all the assurances required by the exporter to have its Commercial Bank deal directly with the importers Bank.
17.As far as prefunding of accounts held at the Bank of Mauritius, it was pointed out that these funds would be treated as Reserves and would generate comparable returns as is received from other sources. Details of prefunding would be prepared and sent to all Central Banks.
Decisions
18.The Bureaudecidedas follows:
(i)Tooknote of the above Progress Report and work plan on the Implementation of REPSS;
(ii)Central Banks should expedite the signature of the various agreements pertaining to REPSS and its Operations and prefunding of their USD and EUR accounts respectively; and
(iii)REPSS Operations be fully supported and aggressively promoted by all Central Banks, as directed by the COMESA Authority of Heads of State and Government, for the benefit of the region.
Audited Financial Statements of the COMESA Clearing House for the Year Ended 31 March 2009 (Agenda Item 3(b))
19.The Bureaunoted the presentation of the COMESA Clearing House on the Audited Financial Statements for the year ended 31 March 2009, which is contained in Annex I of this report. This showed a total income of US$ 871,223 against expenditures amounting to US$ 554,448 resulting in an excess of income over expenditure of US$ 316,775
20.The representative of the Clearing House informed the Bureau that following discussions with the auditors it was decided that the outstanding audit for the year ended 31 March 2010 would be carried out in November 2010. Auditing for the year ending 31 March 2011 will then be carried out in June 2011.
Decision
21.The Bureau approved the Audited Financial Statements of the COMESA Clearing House for the year ended 31 March 2009.