The Common Market for Eastern and Southern Africa (COMESA) Business Council has proposed a new digital financial inclusion program that will have to be adopted by member countries to kick start affordable, accessible and timely digital payment systems in the micro, small and medium enterprises (MSMEs) in the region.
The proposed “COMESA Digital Integrated Common Payment Policy and Framework for SMEs” was tabled for validation at a virtual consultative meeting held in Kigali City this January 20, 2021 to kick start the region’s validation of its policy and framework that will be submitted to respective member states.
The move will be piloted in nine countries including: Rwanda, Zambia, Malawi, Tanzania, Uganda, Kenya, Egypt Ethiopia and Mauritius.
Sandra Uwera, the CEO Comesa Business Council (CBC) noted three foundational elements that are critical to unlocking the potential of digital financial innovation for MSMEs across the COMESA region- that is: Available and affordable internet digital platforms, digital skills and entrepreneurship.
Uwera said that the digitization is needed since only one of four SMES have currently invested in technology and digital payment, which is low compared to the potential of harnessing a financial gap of $136billion transacted annually in SMEs in Africa.
With MSMEs making 80% of the business community in the Comesa region, and largely marginalized from the current Covid19 driven digital world by operating in non-digital tools, Uwera said that once interoperability in digital payments are introduced this will enable many African business to transact volumes across borders.
The meeting discussed key areas that each country needs to work on to make this happen- this include having a harmonisation Policy framework reflected in national policies, Interoperability and timeliness of payments, low cost cross-border retail payments, regulations and guidelines harmonised from national to regional level to ensure consumer security and data protection among others.
Michel Sebera, the Permanent Secretary (PS) Ministry of Trade and Commerce Rwanda asked the meeting to address challenges and gaps in MSMEs across the region by having a harmonized policy framework in place that encourages standardized model regulatory requirements that support digital cross border transactions that are affordable, transparent , real time and benefiting consumers and customers at the grassroots level.
“We will submit the outcomes of this consultative meeting to respective countries so that they can integrate these areas into the regional policy, but so far Rwanda is ahead of others since it has an interoperability policy in place,” said Dr. Jonathan Pinifolo, CBC Digital Financial Inclusion Manager.
Pinifolo said that this means that it will be a bottom-up methodology and member countries will have to adopt national policies considering the regional framework which includes legal and policy issues that will have to be harmonized.
The role of stakeholders and private sector will be highly needed in integrating their businesses operations within the regional direction so as to ease doing of business at a time when the Covid-19 pandemic has deemed technology as the next step of doing trade.
Dr Jean Baptiste Mutabazi, the CBC director of Infrastructure revealed that they have solicited €800million from the European Union to support and enable member countries to implement this program which will need infrastructure at the core of its success, especially interoperability as its holy grail.
George Odhiambo, the Managing Director of Kenya Commercial Bank (KCB) Rwanda said that cultural mindset challenges must be overcome as Comesa prepares for the digitization and financial inclusion across Africa, security must come first to prevent cybercrimes.
Odhiambo advised that the Comesa should first address the issue of territory interest which has been a setback for some policies such as interoperability in telecoms, and a need to have a domestic African currency that will ease the inter-trade payments currently determined by the US dollar.
However, the Rwanda Private Sector Federation chairman, Robert Bafakulera said that considering the importance of SMES in regional trade, there must be a way of creating a regional e-commerce platform to facilitate digital-driven trade and create new business opportunities for the region.