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The Common Market for East and Southern Africa (Comesa) says it is resuscitating its clearing house facility by putting in place a new multilateral regional payment and settlement system. Zimbabwe, suffering under Robert Mugabe’s authoritarian rule, has surprisingly been chosen to host the organisation’s executive secretary who will be based in Harare .
The initial system was set up in 1984 by the Preferential Trade Area (PTA), Comesa’s predecessor. The clearing house was meant to facilitate trade by the use of national local currencies within the region in the settlement of payments for trade conducted among member states. This was meant to economise on the use of scarce and elusive foreign exchange resources in such trade within the region.
The operations of the clearing house stopped in 1997 following the liberalisation of foreign exchange markets in most of the Comesa member countries including in Zimbabwe.
A spokesman for Comesa says: “Despite the liberalisation of the foreign exchange market, shortages of foreign exchange are as acute as ever before. The committee of the central bank governors has therefore agreed to resuscitate the clearing house by putting in place a new multilateral netting regional payment and settlement system, which takes into account the new economic liberalised environment.”
The organisation is now seeking applications from Comesa states for the powerful position of executive secretary. Among the qualifications for this position is that an individual has to have served either as a reserve bank governor, deputy governor, or managing director of a central bank in the region.
The individual could also be considered for the lucrative post if they have experience as a departmental manager in a member monetary authority with earlier experience in economic research or payment system.
The decision to rescusciate the clearing house comes when Zimbabwe’s foreign currency situation continues to worsen because of low exports from virtually all sectors of the economy including manufacturing, mining, tourism, and agriculture. The economy contracted further during 2002 from a decline of 7.5% recorded in 2001 to a decline of 12% in 2002, following Mugabe’s confiscation of efficient and profitable white-owned farms and the subsequent ruination of the agrarian economy. The problem has worsened because of an understandable lack of substantial foreign direct investment and poor performance of exports. The uncompetitive exchange rate and high inflation adversely has also affected the viability of exports.
Since the country is earning less for its exports, debts have escalated and Zimbabwe owes South Africa, Mozambique, and the Democratic Republic of the Congo (DRC), and Libya billions of dollars in unpaid fees for various services including electricity and fuel supplies.
The country has now been slapped with the notorious “risky trading partner” label by its neighbours. South Africa , Zimbabwe’s largest trading partner, two years ago cut off insurance cover for the country’s exports, making it extremely difficult for exporters to do business with the country.
Zambia has also slapped “punitive tariffs” on goods from Zimbabwe , resulting in an embarrassing diplomatic tiff between the two friends.
South Africa is not a member of the Comesa clearing house and has instead opted to concentrate on more international groupings such as the African, Caribbean and Pacific (ACP) states and the World Trade Organisation (WTO). The country negotiates its own deals with these organisations, sometimes riling its poorer neighbours.
The member countries of the Comesa clearing house are Angola, Burundi, Comoros, DRC, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe .