Over the last five years, Africa’s geographic regions have made integration a priority, and most have recorded successes already—East Africa being the most glaring of them. However, further success at boosting intra-African trading and all the economic goodies that come with it will require more effective cross-border payment systems.
Lesetja Kganyago, Governor of the South African Reserve bank (SARB), highlighted the impact of successful payment systems in a discussion with economic stakeholders this week. According to him, Integrated Regional Electronic Settlement System (SIRESS), which launched in July 2013 by the South African Development Community (SADC), is already yielding positive dividends. “About 43 percent of intra-SADC payments were now taking place through SIRESS. By the last week of April this year, SIRESS had reached the R1 trillion ($83.7 billion) settlement mark,” he said.
He lauded other regional solutions implemented in the payment systems space since the turn of the millennium, these 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.”
Some of the benefits of EAPS include real-time funds transfers, finality and irrevocability of payments, increased accessibility and same-day settlement. The initiative is indeed a success that is worth celebrating.
By concentrating on implementing these effective solutions in other regions, Africa can significantly ease the hassles and difficulties in its intracontinental trade and facilitate a seamless flow of goods and services across borders, thus liberalizing trade.
The broad outcomes from trade liberalization would include increased output, greater specialization and lower prices which can be passed on to the citizenry. Additionally, the continent may witness strengthened political ties which is clearly desirable from an integration standpoint. Finally, more intra-African trading can create a virtuous cycle that improves the socio-economic lot of African nations by way of job and wealth creation.
By Emmanuel Iruobe