CHAMWE KAIRA
Namibia is exploring an instant payment solution, officer in charge at the Bank of Namibia, Marsorry Ickua, told the Afreximbank Trade Finance Seminar held in Windhoek.
The central bank official announced that over 70 countries are implementing Fast Payment Systems (FPS), and another 20 are in advanced stages.
“The solution will position the country to benefit from reduced transaction costs and increased access for all segments of the population, including rural areas and the informal economy. The fast payment solution can be leveraged to enhance cross-border payments, boost trade, and provide greater financial inclusion. Ultimately, this should transform how businesses and individuals engage in the global financial system. These advances can be scaled to a continental level,” Ickua said.
He said the seminar was taking place at a time when the world’s economic landscape is shifting and Africa’s trade ambitions are clearer and more essential than ever.
“The African Continental Free Trade Area (AfCFTA) is a significant step, but we still face hurdles in lowering tariffs and lifting non-tariff barriers to trade,” he said.
Ickua said the role of the central banks in trade finance is that of an enabler. Trade finance facilitates payments for exporters and provides importers with the necessary credit to fulfil trade orders, he added.
He said financial instruments, such as letters of credit and guarantees, mitigate risk and enable businesses to engage in trade confidently.
These tools are expected to increase trade volumes and spur economic growth by allowing countries to import essential goods and services and export products and services, he went on to say.
“When trade finance simplifies and secures business transactions, the continent becomes more attractive to foreign investors, and the capital inflow stimulates economic growth.”
The central bank official said embracing digital transformation has the potential to reshape Africa’s trade landscape.
Ickua said advanced digital solutions can simplify and secure trade processes, helping to reduce transaction costs and streamline cross-border payments.
He said technologies can improve transparency and efficiency in trade finance, ensuring that even the smallest businesses can access the credit and resources they need to participate in international markets.
“This shift towards digitalisation empowers Micro, Small, and Medium Enterprises (MSMEs), enabling them to overcome traditional barriers and engage more actively in regional and global trade.”
He added that non-tariff barriers (NTBs) are a crucial impediment to trade facilitation on the African continent. The African Development Bank estimates indicate that only 28% of banks’ total trade finance portfolio benefits MSMEs.
African Central Banks increasingly play a catalytic role in enhancing trade and unlocking economic opportunities.
“Work has begun to realise the lofty dream of the Pan-African Payment and Settlement System (PAPSS). This is a step in the right direction and should positively enhance cross-border payments in Africa, thereby supporting increased trade volumes as anticipated in implementing the AfCFTA,” said Ickua.
Within the SADC sub-region, good progress has been made in implementing the Real Time Gross Settlement System (RTGS), and the volume of trade settled has increased from N$142 billion in 2022 to N$210 billion in 2023.
The RTGS has served the SADC community well within the last 10 years, with the rand serving as the settlement currency. A key activity, as we advance in payment system integration, is to onboard the other currencies in the system, which will widen the number of settlement currencies accessible to the players.