Cross-border payment systems key in Africa - Kganyago | Fin24
 
  • Solly Moeng

    Give business owners a reason to stay in South Africa.

  • Pravin Gordhan

    The minister says SA is paying more for electricity because of theft at Medupi and Kusile.

  • Keep Flying the Flag

    The ANC says the state must keep a 'restructured' SAA as a national airline.

Loading...

Cross-border payment systems key in Africa - Kganyago

May 05 2015 18:25

Cape Town – The development of regional cross-border payment systems will lay a solid foundation for facilitating trade and investment in Africa, South African Reserve Bank (Sarb) Governor Lesetja Kganyago said on Tuesday.

Kganyago said the SADC Integrated Regional Electronic Settlement System (Siress), launched in July 2013, is already having a significant impact on cross-border payments – 43% of intra-SADC payments were now taking place through Siress.

“By the last week of April this year, Siress had reached the R1trn settlement mark,” he said.

Cross-border payments within Africa are primarily still made through correspondent banking relationships with banking partners in the US and Europe, however, data shows that there has been a reduction in the number of these relationships. 

It is unclear if the drivers of the reduction relate to new financial crime regulations, an increase in cross-border money remittances or competition from transfer companies.  

“If the decline is the result of establishing efficient settlement systems across borders, then this is a welcome development. However, if it is flowing from the unintended consequences of changes in regulation, then it would be a matter of concern,” said Kganyago.

Attended by almost 450 delegates from more than 40 countries, the three-day conference has brought together policy-makers, industry leaders and the broader financial community from across the African continent.

Integration agenda

Against the background of new financial crime regulation, Kganyago said global banks may be apprehensive about high risks of uncertainty in facilitating transactions with unknown or non-vetted clients, especially those in emerging markets and developing economies.

“This raises the potential for fines and reputational risk for these banks, and, therefore, reduces the appetite for exposure to specific jurisdictions by banks participating in this environment.”

According to Kganyago small and medium sized business will suffer the most through the reduction in global correspondent activity.

“If you do not have efficient and affordable cross-border remittance systems, people will rely on informal means of sending money across borders. In this process, dirty money will also utilise those channels, thus in effect defeating the intention of curbing the financing of terrorism and money-laundering.”

In Southern Africa, the decline in correspondent banking could be directly attributed to the take-up of the Siress system, the Sarb governor said. “Siress could in future have an even more significant impact on correspondent banking activity within the SADC region.”

Examples of other regional solutions implemented in the payment systems environment since the year 2000 include the West African Monetary Zone (WAMZ), and the East Africa Payment Systems (EAPS) of the East African Community (EAC).

“The EAPS is a secure, effective and efficient funds transfer system that enhances efficiency and safety of payments and settlements within the region. It also facilitates cross-border transactions that are essential for boosting intra-regional trade among East African countries.”

Kganyago also stressed that the systems needed to “talk” to each other so that capital can flow.

“These regional initiatives are also paving the way for the achievement of the integration agenda of the whole continent.”

sarb  |  lesetja kganyago  |  banking
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.
 

Company Snapshot

Voting Booth

How concerned are you about ransomware attacks?

Previous results · Suggest a vote

Loading...