By Siphokazi Vuyo
SA Reserve Bank Governor Lesetja Kganyago has highlighted the G20’s commitment to enhancing cross-border payments to boost access, cost-effectiveness and transparency to support trade across the continent.
Kganyago made the remarks during a two-part G20 side event co-hosted by the Committee on Payments and Market Infrastructures (CPMI) on enhancing cross-border payments at the Cape Town International Convention Centre.
Making cross-border remittances between African countries cheaper and ensuring that systems work to support trade across the continent is among the top discussions at the G20 meetings this week.
“Implementing fast payment systems and increasing interoperability in payments are crucial for enhancing cross-border payments in Sub-Saharan Africa. To achieve this, it’s essential to learn from regions that are closer to achieving the G20 roadmap targets,” he said.
Recognising the importance of efficient payment systems for global economic growth and financial inclusion, the G20 developed a Roadmap for Enhancing Cross-Border Payments. It addresses the challenges of moving money across borders.
Kganyago said that currently corridors in Sub-Saharan Africa were expensive, with costs reaching up to 25% in some cases. The target is to bring this down to 1%.
He said some of the key challenges in implementing fast payment systems included foreign exchange control requirements, high transaction fees and the need for greater investment in digital infrastructure.
“To overcome these challenges, it’s essential to focus on lessons from Sub-Saharan Africa and regions closer to achieving the G20 roadmap targets. While progress has been made, more needs to be done to achieve the targets. The Financial Stability Board (FSB) and the Committee on Payments and Market Infrastructures are working together to prioritise future work and facilitate greater progress,” Kganyago said.
Economist Mzwanele Ntshwanti said the African Continental Free Trade Area and regional trade partners should establish a unified payment system and common currency to facilitate seamless cross-border transactions.
This required hard and digital infrastructure.
“Regional central banks may have to devise macro prudential policy and exchange rate controls measures to facilitate these payments. This must be done in a way that is consistent with international financial conduct and not undermine countries’ monetary policy systems,” he said.
