....they know no borders'
tweet from SWIFT’s African Regional Conference in Gaborone earlier this year.
‘It is not unusual to have better flight connections between African countries by first going to Europe. To a large extent, the priority of domestic rail and road infrastructure is outward linkages to seaports, rather than to neighbouring countries.
And it is quicker to effect payments to Europe, North America and other developed markets than across borders within Africa’ said Linah K Mohohlo, Governor of the Central Bank of Botswana, in her
keynote speech at the ARC gala dinner.
SWIFT’s just-released white paper ‘Africa Payments: Insights into African transaction flows’ provides more detail.
- nearly half of settlements WITHIN Africa involve banks outside of Africa. No wonder transaction costs are high.
- of all commercial payments sent from Africa, 49% are dollar-denominated. This trend may look unsustainable when less than 10% of the underlying trades have their final destination in the United States.
No wonder then that African nations are collaborating on a number of regional clearing infrastructures. The SWIFT paper outlines those of a number of groups:
- SADC – Southern African Development Community
- ECOWAS – WAMZ – West African Monetary Zone
- ECOWAS – WAEMU/UEMOA – West African Economic and Monetary Union
- AMU – Arab Maghreb Union
- ECCAS – EMCCA/CEMAC
- COMESA – Common Market for East and Southern Africa
Whether such new infrastructures will emulate those in developed economies remains to be seen. Africa has already demonstrated its ability to lead the world in mobile payments.
Putting growth back on the agenda’, a special McKinsey paper for Sibos, lists 'developing infrastructure capable of leapfrogging legacy systems’ as one of three particularly promising opportunities.