The Southern African Development Community (SADC)'s Payment Systems Subcommittee under the SADC Committee of Central Bank Governors (CCBG) convened its annual regional conference in Windhoek, Republic of Namibia, on 13th and 14th February 2023 to deliberate on developments in the regional payment systems ecosystem, and most importantly the impact of digitisation on initiatives to enhance financial inclusion and integrity.
The SADC Secretariat, through the Support to Improving the Business Environment Programme (SIBE) in the SADC Region, in collaboration with Bank of Namibia and the Regional Payment Systems Integration Project office, supported the conference. SIBE is a five-year programme implemented by the SADC Secretariat and supported by the European Union (EU) to achieve sustainable and inclusive growth and support job creation through the transformation of SADC into an investment zone promoting intra-regional investment and Foreign Direct Investment (FDI), in particular for Small and Medium Enterprises (SMEs).
The Payment Systems conference, last held during pre the COVID-19 era, saw speakers from the Member States as well as international recognised institutions in the payments industry convene sharing their experiences with delegates on a wide range of payment systems and settlement related topics, including the evolution of payment systems regulations in the digital era.There were panel discussions on various topics, with speakers sharing insights and futuristic solutions. Topics covered included the adoption of Central Bank Digital Currencies (CBDCs), digitisation of cross-border payments to drive financial inclusion, a case study on instant payments (and implementation considerations), sound approaches to cyber resilience in the digital world and key considerations for modernising payment systems.
Among others, the conference considered progress on the implementation of the SADC-Real Time Gross Settlement System (SADC-RTGS) renewal programme. The main objective of this programme is to modernise the settlement system in a manner that promotes efficiency and effectiveness. The renewal journey will also minimise risks to the payments ecosystem by leveraging technological developments in order to extend the availability of digital services to all sectors of society for the benefits of the Region. The total number of transactions settled on the SADC-RTGS as at the end of January 2023 was 2,834,860 representing a value of ZAR10.97 trillion. Banks drawn from 15 Member States participate in the system and the total number of participating banks, including central banks as participants, is 89.
The CCBG was established by the SADC Committee of Ministers for Finance and Investment (COMFI) in July 1995 and approved by the SADC Council in August 1995. Chapter 10 of the Finance and Investment Protocol (FIP) which stipulates that the CCBG shall consist of central bank governors of each SADC Member State.
The CCBG was established to, among others, carry out the mandate to coordinate the regional payment strategy in line with institutional arrangements outlined in Annex 6 of the SADC FIP. The CCBG plays a critical role in order to foster financial sector stability in the SADC Region. At national level, central banks are custodians of the financial sector stability, champions on the oversight of the payment and settlement system as well as supervisors of the banking sector.
The SADC Protocol on Finance and Investment was concluded with the aim of, among other things, fostering cooperation among central banks to cooperate in providing a reliant regional payment system.
In his welcoming remarks, Technical Advisor to the Governor of the Bank of Namibia, Mr Romeo Nel, said banks were in the middle of a global digital payment evolution of technology, services and consumer behaviour, all shaping the payment landscape.
Mr Nel said it was exciting to see central banks innovating in their pursuit of CBDCs and other equally exciting solutions, such as faster payments, and to witness the sharing of expertise, knowledge, and information as central bankers and partakers of payment systems.
However, even though technology provides exciting new prospects that have the potential to fast-track development, success in the digital age comes with challenges and obstacles for developing countries. Access and inclusion to ICT required national infrastructure, including internet connectivity and sufficient electricity supply that spans across the whole country.
Mr Nel said banking the unbanked was essential for the economy and that the emergence of financial technologies (FinTechs) had revolutionised the way financial services were understood and experienced, opening a new world of possibilities for people previously left out of the banking systems. There was a need for laws to be amended and policies to be implemented to ensure that digital transformation supports the modernisation of the payments sphere.
In his message of support, SADC Secretariat representative, Mr Rado Harilala Razafindrakoto, said in light of new developments in the payments industry, the conference was a great opportunity for sharing best practices and peer-to-peer learning for Member States on topical areas such as FinTech, modernisation of payment systems, cyber security and CBDCs.
The SADC Secretariat will continue to mobilise resources in support of the financial integration agenda, including payment systems. Consultancy services have been commissioned by the EU for the identification and formulation of an action to support the development of an integrated, credible and robust capital and financial market in the SADC Region.
Mr Razafindrakoto said SADC Secretariat acknowledges the good progress achieved in Payment Systems in the Region.
He expressed gratitude to the EU through the SIBE Programme for supporting the convening of the conference. Initiatives under the current financial year and those planned for the next financial year 2023-24 being funded by the EU-SIBE Programme include the Implementation Strategy Study and Defining of a Tactical and Strategic ISO 20022 Roadmap per Individual Central Bank in 14 countries in the SADC Region; TCIB awareness campaigns in Member States to enhance use of the system; and supporting the implementation of the SADC RTGS Renewal Programme.
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SADC Payments Systems Chairperson, Mr Tim Masela, spoke of the need for the conference to tackle evolution of payments in the digital ear and the importance of modernising retail payments, evolution of regulatory frameworks, new generation RTGS, the use of the card as a payment instrument, and the cross-border payment agenda.
Mr Masela said many central banks were focusing on the FinTechs agenda and that there was a need to manage risk while prospecting leveraging innovative developments. In this regard, Central Bank Governors in the SADC Region had established a FinTech working group to collectively develop SADC central bank positions on FinTech developments.
He also stressed the importance of big technologies in the finance sector and its implications for financial stability, public policy, market concentration and data governance challenges. This was because the current regulatory frameworks were not designed with big technology in mind. There was therefore a need to embrace technology and putting the consumer first.
The conference also deliberated on alignment to the global cross border payments initiative, principles guiding the initiative such as the Central Bank and commercial bank models, governance arrangements, regulatory oversight and supervisory arrangements looking at where the Region was regarding these areas.
