The Common Market for Eastern and Southern Africa (COMESA), a 21-country regional trade bloc representing over 640 million people, has launched a new digital payments platform that could make it easier and cheaper for African businesses to trade directly in local currencies instead of the US dollar.
The system, known as the Digital Retail Payments Platform, is designed to enable traders to settle cross-border transactions directly in their national currencies.
It is being tested between Malawi and Zambia, but the plan is to roll it out across all 21 COMESA member states, including Kenya, Ethiopia, and Egypt.
The trade bloc hopes the new system will keep costs below 3% of the value of each transaction, down from the current average of around 8%.
It’s being implemented in partnership with two digital financial service providers and a foreign exchange firm, though COMESA hasn’t named them yet.
“For the first time, cross-border trade within COMESA can be settled directly in local currencies,” Kenya’s Trade Minister Lee Kinyanjui said on Thursday during the launch in Nairobi. “This is a game-changer.”
Combined $1 billion GDP
COMESA brings together 21 countries in eastern, southern, and parts of northern Africa. Its members include Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Eswatini, Ethiopia, and Kenya.
Others are Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tunisia, Uganda, Zambia, and Zimbabwe.
Together, they represent a market of over 640 million people and a combined GDP of over $1 billion, making COMESA one of Africa’s largest regional trading blocs.
Intra-COMESA trade remains small, accounting for less than 10% of the bloc’s total trade, according to the regional secretariat. This is primarily due to currency conversion costs, limited financial connectivity, and the reliance on the US dollar for settlements.
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The new payment system could unlock billions in trapped value by making it easier for small and medium-sized companies to trade across borders.
For Kenya, Egypt, and Ethiopia, which collectively account for nearly half of COMESA’s combined GDP, the shift could ease pressure on dollar reserves and stabilize exchange rates.
Kenya’s President William Ruto, who recently became COMESA chairman, stated that the platform represents a significant step toward deepening Africa’s economic integration.
He said Kenya has increased its investments in regional trade banks, including the Trade Development Bank (TDB) and Afreximbank, by $100 million and $50 million, respectively, to support these efforts.
“One of the most viable pathways for Africa is to strengthen our home-grown financial institutions,” Ruto said.
The new payment platform could help reduce the dollar’s grip on regional trade, allowing local currencies, such as the Kenyan shilling or Ethiopian birr, to play a larger role in driving commerce across eastern and southern Africa.
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