20 June 2018

SWIFT data shows intra-Africa payments clearing and trade is increasing

Use of US dollar declining while West African franc and South African rand increasing

Kigali, 20 June 2018 – SWIFT’s report, Africa Payments: Insights into African Transaction Flows, reveals that intra-Africa payments clearing and trade is increasing in importance. The paper maps commercial payment flows against financial flows, pointing to an increase in the use of African currencies for cross-border payments and a decline in the dominance of North American clearing banks and the use of the US dollar. In the same period, there has been a reduction in the number of foreign correspondent banking relationships in most African regions. The paper also identifies the forces driving change and their impact on banks doing business in Africa. 
 
SWIFT, a global financial messaging provider, published the white paper today at the 25th SWIFT African Regional Conference in Kigali, Rwanda. The report opens with a foreword by the African Development Bank and features contributions from the Bill & Melinda Gates Foundation, the South African Reserve Bank, Ecobank, Standard Chartered Bank and BankservAfrica.

Moono Mupotola, Director of Regional Integration at the African Development Bank, said: “More than ever before, Africa needs to accelerate intra-regional trade and bring down market barriers. Papers such as this SWIFT report provide invaluable insight for policy makers, banks and other financial institutions. The paper is a compelling guide that will help stakeholders better understand the movement of financial flows and goods. It is my hope that the report will assist in developing the right policies to connect the continent’s markets, deepen regional integration and adopt reforms that enhance competitiveness.”

SWIFT data highlights a significant increase in intra-African commercial payments, with almost 20% of all cross-border commercial payments being credited to an African beneficiary. This indicates that more goods and services are being bought and sold within Africa. This is up from 16.7% in 2013. Intra-African clearing of payments has also increased, from 10.2% in 2013 to 12.3% in 2017. This indicates that an increasing number of payments are being routed through Africa instead of via a clearing bank outside of Africa. 

While North America remains the main payment route of financial flows from Africa, its dominance is declining. Banks in North America (mainly the United States) now receive 39.5% of all payments sent by Africa, down from 41.7% in 2013. Use of the US dollar has also decreased as a share of payments originating in Africa from more than 50% in 2013 to 45.1% in 2017. 

The use of local currencies such as the West African franc and South African rand is increasing. Use of the franc for cross-border payments has overtaken the rand and the British pound, accounting for 7.3% of payments in 2017, up from 4.4% in 2013. The rand has seen a smaller increase in cross-border payments from 6.3% to 7.2%.

Meanwhile, Europe’s significance as a clearing and trading partner for Africa is increasing. Commercial flows directed to clients based in Europe have increased from 26.4% in 2013 to 28.6% in 2017. In contrast, SWIFT data suggests that both the British pound and UK clearing banks are losing share of African imports with commercial flows dropping to from 10.4% in 2013 to 9% in 2017 and financial flows from 11.7% to 9.3%. Financial flows do not reflect the magnitude of commercial flows between Africa and the Asia Pacific region. While 21.7% of commercial flows are destined for Asia Pacific, only 5% of financial flows are routed through the region. 

Since 2013, almost all African regions have experienced a significant drop in the number of foreign correspondent banking relationships. The Maghreb region has seen the largest reduction, of 47.25%, since 2013, while the East African Community is the only region to see an increase in relationships.

Sido Bestani, Regional Director for the Middle East, Turkey and Africa, SWIFT, said: “Regional initiatives across Africa are eliminating obstacles to trade through integration and harmonisation; driving economic transformation. They bring greater economic stability and resilience and, according to SWIFT data, are a major catalyst for the evolution of cross-border trade and banking in Africa. Other factors, such as the evolving corporate sector and regulatory pressure in financial markets, are also playing a powerful role in driving change in Africa.”

Denis Kruger, Head of sub-Sahara Africa, SWIFT, said: “Africa’s transaction banking landscape is evolving as a result of a variety of macroeconomic factors which will continue to shape Africa’s banking sector in the years to come. Digitisation and technological innovation will also play an increasingly important role. To be successful, pan-African players will need to carefully monitor these forces so that business can be well positioned to benefit from potential shifts.”

Africa Payments: Insights into African transaction flows

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20 June 2018

SWIFT white paper explores trends in transaction banking in Africa and what is driving these changes and looks at possible evolution scenarios that will impact banking in Africa in the years to come.

  • Future of payments and banking
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Press Contacts:
Claire Williams
Atmosphere Communications
claire@atmosphere.co.za

Notes to editors:
The SWIFT Africa Payments White Paper is based on unique data and analysis from SWIFT Business Intelligence. This portfolio of tools, including analytics, insights and economic indicators, provides granular detail on SWIFT traffic across a variety of metrics, including currency, product type and value, and enables financial institutions to track market evolution. This helps them to make fact-based business decisions and more efficient use of their resources, and to identify market trends. For more information on SWIFT Business Intelligence and other services, please go to www.swift.com.

About SWIFT
SWIFT is a global member owned cooperative and the world’s leading provider of secure financial messaging services. We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and regulatory compliance. 

Our messaging platform, products and services connect more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. While SWIFT does not hold funds or manage accounts on behalf of customers, we enable our global community of users to communicate securely, exchanging standardised financial messages in a reliable way, thereby supporting global and local financial flows, as well as trade and commerce all around the world. 

As their trusted provider, we relentlessly pursue operational excellence; we support our community in addressing cyber threats; and we continually seek ways to lower costs, reduce risks and eliminate operational inefficiencies. Our products and services support our community’s access and integration, business intelligence, reference data and financial crime compliance needs. SWIFT also brings the financial community together – at global, regional and local levels – to shape market practice, define standards and debate issues of mutual interest or concern. SWIFT’s strategic five year plan, SWIFT2020, challenges SWIFT to continue investing in the security, reliability and growth of its core messaging platform, while making additional investments in existing services and delivering new and innovative solutions.

Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centres.

For more information, visit www.swift.com or follow us on Twitter and LinkedIn.

Future of payments and banking

Africa Payments: Insights into African transaction flows

SWIFT white paper explores trends in transaction banking in Africa and what is driving these changes and looks at possible evolution scenarios that will impact banking in Africa in the years to come.

PDF icon Download (3.54 MB)
English

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