Beginning in West Africa in the early 2000’s, regional payment systems across Africa have been developed and are now being successfully deployed. This is helping to drive continuing regional growth as they are transforming the way that business and trade are conducted, making it easier to develop intra–regional trade. For example, funds transferred across the East Africa Community member States total in excess of USD 5bn equivalent annually. The regional payment system will reduce the reliance on Correspondent Banks and therefore the cost of the transactions. 

Regional payment systems 

Current systems include:

• West Africa – regional payment infrastructure for RTGS, automated clearing house and card transactions
• East Africa – East African Payment System (EAPS), launched in 2013 providing local multi-currency settlements across the East African Community (EAC)
• Southern Africa - SADC Integrated Regional Electronic Settlement System (SIRESS), which now accounts for over 40% of payments across the region. Only launched in 2013, regional payments settled through the system already exceeded the equivalent of USD85bn by April this year.

Other developments

The 19 members of the Common Market for Eastern and Southern Africa (COMESA) introduced a Regional Payment and Settlement System (REPPS) in 2012 for same-day USD and EUR settlement. As at 2014, 5 countries were live on the system with more countries expected to go live in the near future. One of the main benefits of REPPS is the expected reduction in transfer charges relating to intra-regional trade, which have been estimated to be in excess of USD600m 

The development and integration of regional payment systems can only be enhanced by developments such as the signing of the Tripartite Free Trade Area in June 2015. This has created a free-trade bloc across 26 countries covering SADC, COMESA and EAC - more than half the African Continent.

Future developments

Although challenges remain, including financial and technological development, and countries where the local payment systems are not fully automated, these regional systems are set to play a bigger role in clearing intra-regional settlements in the coming years. Many experts expect that in the coming years there will be moves to integrate the various payment systems to provide a pan-regional settlement capability.

---

CTMfile take: The integration of the regional payment systems will make settlement quicker, improve value dating and reduce costs for corporates operating across Africa. Whilst a mixture of global, regional and local banks may still be required to manage business in each country, the ability to achieve cross country settlement more efficiently could help corporates operating across the continent to improve the efficiency of their intra-regional business significantly. (SP)