Data from SWIFT shows that Africa’s traffic growth has outperformed the total growth of SWIFT globally. In the year to date, total message traffic volumes grew by 15.2% versus 6.4% growth for SWIFT worldwide, illustrating that Africa plays an increasingly important role in SWIFT’s global business. Levels of growth were also significantly higher than in EMEA overall at 8.5% and the Americas at 5.7%. This is not the first time that Africa has outperformed SWIFT global growth. In the same time period in 2016, for example, African volumes rose by 12.8% versus 5.4% global growth.
Growth in Africa is underpinned by a significant increase in payments traffic. This indicates that, despite challenging global conditions including the downturn in the commodities cycle that has significantly impacted several markets, many countries in Africa continue to see relatively stable economic growth. African payment traffic volumes grew by 16.9% versus 11.6% for the same period last year. Growth was even more pronounced in the Southern African Development Community (SADC), which saw growth of 21.6%. Africa remains the fastest growing region for payments traffic, ahead of the Americas at 11.1%, EMEA at 9.2% and Asia Pacific at 9.6%.
The African securities segment has also witnessed a strong rise in volumes. Securities traffic grew by 14.6%. Compound annual growth for Africa since 2012 has been 13% year on year.
The SWIFT Index, a methodology for anticipating GDP growth by combining global payments data with actual quarterly GDP growth figures, indicates that SWIFT data is closely correlated to economic activity. Rising SWIFT traffic volumes are therefore an indicator of economic growth. The data released today indicates a long-term growth trajectory for Africa.
Denis Kruger, Head of Sub-Sahara Africa, SWIFT said: “Africa remains a significant growth area for SWIFT. Traffic volumes are impressive despite challenging economic conditions. As African countries continue to diversify their economies to drive growth, SWIFT is working closely with the financial community to support them in developing the right solutions to meet their needs.”
African transaction corridors – that illustrate payment or securities messages sent from one African country directly to another – are becoming more important. SWIFT data shows that, in the year to date, 55% of the traffic sent from Africa stayed within the African zone, up by 13% on the same period last year. This trend was more pronounced in securities traffic, where 68% of traffic sent from Africa is intra-regional.
The value of SWIFT data: SWIFT Index – independently validated
The power of the SWIFT Index in anticipating GDP growth was 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. This econometrics expertise was essential to assess how the SWIFT Index relates to GDP growth, and to quantify its superiority relative to standard benchmark models.
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.
The strength of the SWIFT Index is posited on the ubiquity of SWIFT payment traffic, which acts as a mirror of economic activity. The raw data at the source of the Index is the SWIFT MT 103 message. This is a specific message format that enables 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 provides an additional distinguishing advantage for nowcasting: the aggregated volume data is available on a monthly basis within a few days of the end of the preceding month.
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.