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Market harmonisation in Africa:
a community in action

Vision and caution at the heart of three days of interactive debates at the Regional Conference in Africa.

Published on 10 June 2009
SWIFT’s African community met in Marrakech from 19-21 May for its annual conference, which, despite the sober economic climate, attracted a record number of delegates. For the first time, the event was attended by SWIFT chairman Yawar Shah, who addressed the opening plenary.

The theme of the conference, Market harmonisation in Africa: a community in action, was addressed through a series of plenary sessions, panel discussions and work sessions built around four key themes: the financial crisis; regional initiatives; remittances; and corporate access. These were outlined at the start of the conference by Javier Pérez-Tasso, Head of Western Europe, Middle East and Africa, SWIFT, and reviewed again during the closing session with the help of Arthur Cousins, director, Strategy and Product Development, The Standard Bank of South Africa and outgoing SWIFT Board member, Francis Vanbever, CFO, SWIFT, and Alain Raes, Chief Executive, EMEA, SWIFT.

Financial crisis

”Risk management and cost reduction are very high on the agenda, both collectively and within each individual institution, as a result of the crisis,” Pérez-Tasso noted. In that context, a clear message from the conference sessions was that robust market infrastructures are an essential contributor to economic growth and that they had proved their value during the worst of the crisis by continuing to function perfectly under the pressure of extraordinary volatility. “Finally, our chief risk officer understood the benefits of robust plumbing,” quipped Cousins. Vanbever pointed out that risk management and cost reduction are often in contradiction. “SWIFT can help resolve that,” he suggested. “The challenge for SWIFT,” he said, “is to continue to reduce prices in a time of declining volumes.” Raes stressed meanwhile that “SWIFT has continued to invest in shared infrastructure. One of the most important factors in SWIFT's success is that it has been defined in a collaborative way through a community approach.”

In response to a question from Alice Zanza, Senior Financial Sector Specialist in the World Bank Payment Systems Development Group, about the problem with multiple BICs per institution that the Lehmans collapse had brought to light, Cousins observed that the BIC landscape was being “cleaned up”.

Regional initiatives

On regional initiatives, Pérez-Tasso noted that the idea of a single currency for the whole of Africa was a long term shared vision, but that its achievement required both macroeconomic convergence and political will. Energies are currently being devoted to a variety of regional initiatives, each with its own business model. “A next stage,” he said, “would be to explore the practicalities of interoperability among these regions.” “The African community has set itself a very ambitious agenda,” Vanbever commented. “Interoperability involves a lot more than technical specs. SWIFT can serve as a neutral platform for dialogue on how to achieve it.” Raes cautioned that in Europe, integration has been a gradual process. “It was a 30-year journey from the vision to the reality of a single currency,” he observed. Once alignments had been achieved on a first set of targets, new milestones were set.

Remittances

Over the past few years, worker remittances have assumed a growing importance, both for the recipient economies and the individuals at the end of the transaction. While the financial crisis has had a temporary impact on the volume of these flows, the long-term trend is for these to increase.

Traditionally banks have not been at the centre of the remittance business, much of which is handled informally. Pérez-Tasso identified three key conclusions from conference discussions in this regard. While remittances provide a potential business opportunity for banks, he suggested, there is a strong need for regulatory framework governing bank involvement in these transactions to be addressed. Several delegates argued the need for a level regulatory playing field for banks and non-bank institutions. At the same time, Pérez-Tasso noted, there needs to be a reduction in total costs for remittance transactions to compete with existing providers.

Cousins agreed, pointing out that, “South Africa is both a sending and receiving market and is one of the most expensive remittance corridors in the world.” Part of the problem, he confirmed is the discrepancy in regulatory frameworks between banks and non-banks. “A number of South African banks are going to work collectively on a solution,” he said. ”Over the past two years, SWIFT has been working to define a solution for remittance transactions that its community can deploy,” said Raes. From the floor, Zanza commented that the cheapest corridor is between Saudi Arabia and Pakistan. “Fees on that corridor are USD 5 per USD 200,” she observed. “SWIFT should aim to be lower than that.”

Corporate access


The fourth pillar of the conference, corporate access, provided the theme for the second day of the conference. Panellists at the closing plenary agreed that the need for rationalisation and improved risk management were key factors in corporate enthusiasm for the SWIFT platform and that it was largely the corporates themselves that were driving the process of bringing corporate information flows into the SWIFT environment.

Cousins noted however that with 441 corporates on the SWIFT network in 10 years, there is still work to be done. He acknowledged that banks themselves have sometimes proved reticent to promote SWIFT to their corporate clients because, “We want to own our customer.” However, he said, there are a number of corporates that are multi-banked. These can be best served through signing up to SWIFT. “Corporates should be linked to a bank because they value their service not because they are locked in,” added Vanbever, stressing, however, that, “SWIFT, does not want or intend to disintermediate the banks.

The changing shape of CSR

Francis Vanbever confirmed the recent tradition, first implemented at the African Regional Conference in Dakar, Senegal, of making a donation to a local charity in the venues where it holds events. In the case of Morocco, SWIFT has donated EUR 5,000 to SOS Villages d'Enfants Maroc, an organisation dedicated to providing support for homeless children through an innovative village structure. In each of its villages, children are brought together under the care of a mother in each house. Each mother, who may not have had the opportunity to bear her own children, thereby forms a close and supportive relationship with the children in her house.

One Laptop Per Child

At a corporate strategic level, there are two major initiatives to which SWIFT is providing extensive support: One Laptop Per Child (OLPC) and the International Polar Foundation. Walter de Brouwer, CEO Europe, for OLPC, introduced OLPC to delegates through a short film. The organisation, which is entirely privately funded, is aiming ultimately to produce a USD 100 laptop that can be distributed to children in poor countries and which they will own individually. While not yet down to its target price, it already provides a rugged, low-power, connected laptop with content and software designed expressly for children to work and play.

The session and the formal proceedings of the conference ended with tributes to Arthur Cousins, both as outgoing SWIFT Board member and as one of the founders of the African SWIFT community, and with the introduction of Rob Green, Head of Payments, Payments Product House, FirstRand Bank, who will be taking up the Board seat that Cousins is vacating and who has shared much of the journey in building the African community to its current impressive strength.



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