“There are huge shifts in the global economy; Africa is now one of three global trading blocks that are as big as the west, but which are growing 10 times as fast. This dynamic is here to stay.”
Gottfried Leibbrandt, chief executive officer of SWIFT, reiterated these closing remarks at the annual SWIFT African Regional Conference Botswana, reminding delegates that the African continent has moved on from the stereotype of a recipient of western aid. “Africa has firmly positioned itself in this new reality ÔÇô the West is no longer in charge,” he said.
Held in Gaborone, Botswana from 21 ÔÇô 23 May, the 2013 SWIFT African Regional Conference attracted more than 455 delegates from 40 countries to this three-day annual event. Key themes to emerge were the focus on infrastructure at every level, and the opportunities posed by boosting intra-Africa investment.
In his official opening address, Minister Kenneth Matambo, Minister for Finance and Development Planning for Botswana, said, “Cited by The Economist in 2000 as ‘the hopeless continent’, Africa as proved largely resilient in an increasingly competitive and global economy. Far from being hopeless, African governments are increasingly able to raise funds from international bond markets, while investment in Africa has grown at an annual rate of nearly 13 percent since 2007,” he said.
Christian Sarafidis, Head of Western Europe, Middle East & Africa, SWIFT, supported this statement and said Africa has firmly established itself is a continent of hope and opportunity. Sarafidis highlighted Botswana’s second position on the base profitability index of returns on Foreign Direct Investment.
“Of course, there is still a lot to do, not least the need for huge investment in Africa’s infrastructure, but the momentum is clearly underway ÔÇô Africa’s future is in Africa’s hands,” Sarafidis said.
“Lack of infrastructure creates real barriers to growth ÔÇô whether these are barriers to physical travel or to trade and communications,” he said. “But projects across Africa demonstrate that national governments are working to improve their own domestic infrastructure, as well as working with others in regional integration projects to address cross border issues.”
Alain Raes, Chief Executive EMEA & APAC, SWIFT said it was imperative to look at ways of maintaining the momentum that has been achieved.
He agreed that cross-border financial infrastructure was a critical element of Africa’s regional integration projects, only when this part of the puzzle is in place can substantive growth follow. “We need to continue to be innovative in the way that we support these developments, because SWIFT and other providers are important components of the financial architecture that facilitates Africa’s expanding regional growth as well as its role in global trade.”
Nerina Visser, Head of Beta Solutions and ETFs at Nedbank Capital, said regionalisation projects must facilitate cross-border access to financial markets and thereby unleash African investment, particularly in equity markets.
“The dividends and capital growth that is currently flowing out should be captured in Africa, for Africans. There are huge pension funds in Africa but they largely focus on their own economies, and primarily on bonds. This is a highly risky strategy: it offers no diversification, no risk sharing ÔÇô and definitely no intra-African investment,” she said.
Visser had a clear message for delegates. While Africa is moving “from aid to investment”, there are still too many outflows to overseas investors and intra-African investment has to be increased so that it is Africans who benefit from growth and development.
A key theme that resonated throughout the conference was that regional harmonization projects have the potential to revolutionise African trade, and that standardization and harmonization will not only cut cost and improve efficiency, but will also release free market forces to drive innovation.
Tim Masela, Head of the SADC Payments System Project, South Africa Reserve Bank emphasised the idea that payments infrastructure create the “bridges” linking countries, and stressed the need for operational collaboration across multiple projects. “If we adopt standards that are open and international, this will fuel growth. This is important not only to drive intra-SADC growth, but to fuel growth between regions. If EAC, WAMZ, COMESA and SADC, for example, are all using the same standards, this unlocks huge growth potential.”
While acknowledging progress made, speakers stressed that regional projects have to maintain the momentum and avoid politicization. Leina Gabaraane, Chairman of the SADC Banking Association and Managing Director of Stanbic Botswana, warned that participants should not lose sight of the fundamental drivers for the SADC Payment System Project ÔÇô such as driving regional economic growth ÔÇô nor lose the political will that set out to establish the region as a hub.
“We must not let issues become politicized, such as where will the central bank be situated or what will be the settlement currency. We have to remain focused on the benefits that we set out to create and not be sidelined by individual interest,” Gabaraane said.
In the panel looking at other regionalistion projects across Africa ÔÇô featuring Juliet Kairuki, SADC Banking Association and Twum Ohene-Obeng, Deputy Director, West African Monetary Institute, among others ÔÇô the message was that Africa will stand or fall on collaboration.
Ohene-Obeng said projects require a significant amount of effort and dedication from all participants, and that project leaders must not forget to fully communicate the benefits. He said that the move from paper to automation across WAMI had been a financial revolution with a broad range of benefits ÔÇô some of them unexpected. “Not only has automation had a big impact on the efficiency of our money markets, it has generated significant benefits for central bank liquidity management,” he said.
SADC BA’s Kairuku said that the continent’s various projects must ensure that they do not compete with each other. Participants must remember the reason for these projects: the customer.
“[Projects] should be learning from each other and cooperating with each other. We should standardize our systems and processes as much as possible so that the end product supports our customers better than our own interests.”The regulatory panel examined the issues faced by banks and operational challenges presented by sanctions compliance.
“Sanctions compliance is a major challenge for banks,” said Daniel Agamah, Chief Risk Officer and Head of Compliance, Zenith Bank in Ghana.
“For example, due to the absence of a national database on Politically Exposed Persons and because international blacklists are usually not focused on local PEPs, banks are forced to develop their own databases,” he said. “These lists are not uniform, and may miss sanctioned persons or affiliates,” Agamah said.
He added that the screening process was challenging and time consuming, particularly in the case of small banks that have limited compliance capabilities and teams.
Joseph Amoah-Awuah, Assistant Director, Banking Supervision Department, Bank of Ghana, said: “Banks need to make dollar investments in systems such as SWIFT sanctions screening tools and customer account monitoring mechanisms to be able to detect and report suspicious activities and transactions to appropriate law enforcement agencies. This will enhance bank-wide risk management and make them compliant with statutory and regulatory requirements.”
Commending SWIFT for its role in fostering global interconnectedness, Minister Kenneth Matambo said SWIFT has already made significant advanced in Africa. He urged delegates to “explore ways of creating a more cost-effective financial infrastructure that will deepen pan-African economic integration by facilitating trade and capital flows.” “This cannot be achieved without the availability of reliable and secure messaging platforms that will underpin both domestic and cross-border payments and transfers,” Minister Matambo concluded.