Haruna Iddrisu

Haruna Iddrisu

Even though records indicate huge financial flows into Africa from the developed world, there has not been enough trade to buttress the development.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT), a financial messaging provider that serves more than 10,000 banks, securities and corporate customers in 212 countries, revealed this.

This was contained in a white paper, titled ?Africa Payments: Insights into African Transaction Flows.?

It highlighted disconnect between payment routes and the movement of goods and services, particularly between Africa and Asia.

The report further explained that while Asia Pacific countries are the fastest growing trading partners for most African countries, representing 22 per cent of all commercial flows from Africa, only 5 per cent of financial flows are sent directly to banks in the Asia Pacific region.

Conversely, while banks in North America receive almost 40 per cent of the payments sent by Africa, only 9 per cent of the commercial flows are destined for the North American region.

Christian Sarafidis, Head of Western Europe, Middle East & Africa, SWIFT, said existing projects in Western and Central Africa demonstrate the potentially disruptive power of regional harmonization, as well as the significant political will for similar initiatives on the African continent.

?Other factors could also play a powerful role in driving change in Africa such as an evolving corporate sector, regulatory pressure in developed markets and new financial market infrastructure,? he said.

Thierry Chilosi, Head of Banking Initiatives, EMEA, SWIFT and co-author of the report, said the scenarios outlined in the paper depend on different macro-economic factors, which seem to drive significant change in banking in Africa.

?The banks that will be well positioned to grow their business in Africa going forward are probably those that are already monitoring these trends,? he said.

Moono Mupotola, Manager, Regional Integration & Trade Division, African Development Bank, said boosting intra-African trade is an important goal for AfDB and will play a major role in extending the continent?s growth story and promoting inclusive growth.

He said, ?As part of this effort, we must look at ways to cut cost and eliminate risk for African businesses. Papers such as this one, which increase understanding about financial and commercial flows, are an important part of the debate.?

The paper, which features contributions from the Southern Africa Development Community Banking Association, Nedbank Capital and Ecobank on relevant topics, identifies environmental factors that may drive change in cross-border transaction flows, which could reshape pan-African banking, lead to shifts in currency usage and create opportunities for multi-currency clearing in Africa.

Source-Jamila Akweley Okertchiri

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