Figures released at SWIFT’s Business Forum East Africa also show intra-regional traffic has increased 19.8%
Dar es Salaam, 5 September 2017 – Data from SWIFT shows that FIN traffic growth in East Africa has outperformed the total growth of SWIFT globally. In the year to date, total message traffic volumes grew by 20.1% versus 8.2% growth for SWIFT worldwide. This clearly illustrates the increasingly important role that East Africa plays in SWIFT’s global business.
Data also shows that intra-regional FIN payments traffic is up 19.8% from 2015, and now accounts for 69% of FIN payments traffic in the region. The average daily number of messages has almost double since 2013, from 15,234 to 27,907 in 2016.
This growth in intra-regional FIN payments could be a reflection of the success of the East African Payment System, which was established by the East African Community in 2013. The multi-currency system, operating on SWIFT, links the domestic payments systems in Kenya, Tanzania, Uganda and Rwanda. It makes cross-border fund transfers much easier within the Community, supporting the free movement of goods, labour and services. The system aims to reduce transaction time and lower the cost of doing business in the region.
SWIFT traffic growth in the East African Community is significantly higher than the rest of the continent, which also saw major growth. Total message traffic volumes in Africa have increased by 15.4% this year. This is still greater than in EMEA overall at 9.4%, the Americas at 7.8% and Asia Pacific at 5.4%.
The growth in East Africa is driven by a significant increase in payments traffic. This indicates that, despite challenging global conditions, the region continues to see relatively stable economic growth.
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 East Africa.
Denis Kruger, Head of Sub-Sahara Africa, SWIFT said: “East Africa holds some of Africa’s fastest growing economies and is a significant growth area for SWIFT. We are committed to supporting the community in the region, including through the East African Payments System, which is delivering more efficient payments across East Africa.”
East Africa holds some of Africa’s fastest growing economies and is a significant growth area for SWIFT. We are committed to supporting the community in the region, including through the East African Payments System, which is delivering more efficient payments across East Africa.
SWIFT is holding its Business Forum East Africa on 5 September 2017, bringing together policy makers, industry leaders and the broader financial community to discuss the most significant challenges and opportunities facing the continent.
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.
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, standards for communicating and we offer products and services to facilitate access and integration; identification, analysis and financial crime 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, enabling them to communicate securely and exchange standardised financial messages in a reliable way. As their trusted provider, we facilitate global and local financial flows, support trade and commerce all around the world; we relentlessly pursue operational excellence and continually seek ways to lower costs, reduce risks and eliminate operational inefficiencies. 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.
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