THE Southern African Development Community (SADC) is hoping to prove its critics wrong on at least two fronts in the coming two days when a key proposal to extend its cross-border payments scheme is placed before a meeting of the committee of central bank governors in the Sadc.
The proposal is for the payment scheme — which has already been successfully rolled out in South Africa, Lesotho, Namibia and Swaziland — to be extended to at least three more SADC countries.
The scheme allows banks in SADC to remit payments to each other that are settled immediately, eliminating interbank settlement risk and an overreliance on dollar-based settlement. African banks lose 48 percent of this business to foreign banks, while improved payment processes will support increased trade, tourism and investment in the region.
In a related development that could boost African stock exchanges, the SADC Banking Association said on Tuesday it was working with the committee of SADC stock exchanges, which includes the JSE, to facilitate the simultaneous movement of cash and share ownership across member countries.
South African Reserve Bank governor Gill Marcus chairs the bank governors’ committee, and the bank confirmed on Tuesday she would be at the meeting on Thursday and Friday, though it said it was a “closed briefing”.
Arthur Cousins, head of project co-ordination for SADC payments at the SADC Banking Association, said a preliminary meeting by the banking unit would determine what programmes need to be tested and what documents will need to be signed by governments. He said the names of the new countries in the payment scheme could not be revealed as the central banks would first need to approve the moves.“Commercial banks want to start transacting through the SADC infrastructure we’ve put in place,” he said.
The SADC Integrated Regional Electronic Settlement System has allowed banks in the common monetary area in SADC of Lesotho, Namibia, South Africa and Swaziland to stop the practice of clients using current account cheques — which carry significant fraud risks — as a means of cross-border payments.
Other payment-scheme developments being worked on include low-value credit transfers, direct debits, card-based payments and the cash leg of stock market trade settlements and public debt securities.
“The payments project progress has moved along remarkably quickly when the necessary focus is placed on it. It is one shining light in regional development initiatives,” Cousins said. He said the SADC Banking Association was working with the committee of SADC stock exchanges on the stock-exchange leg of the programme.
When asked about the benefits of such an initiative, the JSE on Tuesday said it could “unfortunately not comment on this”.“Anything that helps accessibility and liquidity into African countries has to be welcomed,” said former JSE executive Allan Thomson, who is developing new exchanges in Zambia and Kenya.
He said African exchanges were quickly realising they needed to improve accessibility to attract local and foreign investment
(Business day )