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SWIFT Index shows: economy vibrant in East Africa and each country’s economic health

Recent analyses show that SWIFT FIN traffic numbers are an important indicator of economic activity.

East Africa traffic

Data from SWIFT shows that FIN traffic growth in East Africa has outperformed the total growth of SWIFT globally. In the year to date:

  • total message traffic volumes grew by 20.1% versus 8.2% growth for SWIFT worldwide. (SWIFT believe that thsi clearly illustrates the increasingly important role that East Africa plays in SWIFT’s global business.
  • data also shows that intra-regional FIN payments traffic is up 19.8% from 2015, and now accounts for 69% of FIN payments traffic in the region. The average daily number of messages has almost double since 2013, from 15,234 to 27,907 in 2016.
  • SWIFT traffic growth in the East African Community is significantly higher than the rest of the continent, which also saw major growth. Total message traffic volumes in Africa have increased by 15.4% this year. This is still greater than in EMEA overall at 9.4%, the Americas at 7.8% and Asia Pacific at 5.4%.

SWIFT commented that, “The growth in intra-regional FIN payments could be a reflection of the success of the East African Payment System, which was established by the East African Community in 2013. The multi-currency system, operating on SWIFT, links the domestic payments systems in Kenya, Tanzania, Uganda and Rwanda. It makes cross-border fund transfers much easier within the Community, supporting the free movement of goods, labour and services. The system aims to reduce transaction time and lower the cost of doing business in the region.”

The growth in East Africa is driven by a significant increase in payments traffic. This indicates that, despite challenging global conditions, the region continues to see relatively stable economic growth.

SWIFT Index’s importance for mirroring GDP growth

The power of the SWIFT Index in anticipating GDP growth has been empirically tested in collaboration with the Center for Operations Research and Econometrics (CORE), a leading interdisciplinary research institute in the fields of econometrics, economic theory, game theory and operations research. 

Whilst the SWIFT Index is specifically relevant to OECD countries, the validation of SWIFT data and methodology by CORE demonstrates the relevance of SWIFT traffic information as a means of understanding economic activity.

CORE found that the ubiquity of SWIFT payment traffic acts as a mirror of economic activity because the raw data used in the Index is the SWIFT MT 103 messages which carry the bilateral transfer of information about payment transactions between customers of different banks or financial institutions. It is the de facto global standard for cross-border single customer credit transfers and is used primarily for commercial rather than low-value retail payments. The data collected from these messages is therefore fact-based. Rather than reflecting the sentiment of particular actors, it is an objective measure of real economic activity.

To construct the index, the header information of MT 103 messages is aggregated at a country level providing several million data points each month. In addition to its close correlation with underlying economic activity, the MT 103 numbers are important because they provide each country’s aggregated monthly volume data within a few days of the end of the preceding month.

SWIFT believe that increasingly, the SWIFT Index family of products is being used by economists and decision makers as a delay-free, fact-based leading indicator tool for short-term GDP evolution.

This item appears in the following sections:
SWIFT Corporate Connectivity
Collecting International Bill Payments
Making International Payments

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