SADC Financial Integration

Transcription

1 SADC Financial Integration CPSS - World Bank Forum on Retail Payments Cape Town December 2013

2 Agenda Where the region started When the integration agenda got going Strategic approach to integration Where are we now Where to next Questions

3 SADC Financial Integration foundation SADC region is made up of 15 Southern African Countries (Angola; Botswana; DRC; Lesotho; Madagascar; Malawi; Mauritius; Mozambique; Namibia; Seychelles; South Africa; Swaziland; Tanzania; Zambia; Zimbabwe) Heads of State and Government of SADC signed the SADC Treaty. Articles 21 and 22 became the instruments used to establish the SADC Finance and Investment Protocol. Committee of Central Bank Governors of SADC (CCBG) working on the Regional Indicative Strategic Development Plan (RISDP) which maps out out the phased strategy to achieve a monetary union by Free Trade Area by 2008, Customs Union by 2010 and a Common and Monetary Union by 2016 and a SADC currency by FIP has been ratified by member states therefore it is legally binding on all SADC countries.

4 2003 The work began The SA Reserve bank as chair of the Committee of Central Bank Governors (CCBG) Payments sub-committee initiated a project, funded by the World Bank, to introduce financial market infrastructures in the SADC countries. These infrastructures are payment clearing houses, securities depositories, real time gross settlement systems etc.

5 SADC RTGS Implementation Source: SARB: SADC 2018 Opportunities and Issues Presentation to the SADC Banking Association October 2009

6 BANK BANK Overview of Payment Infrastructure in SADC BANK BANK BANK RTGS CHEQUE/EFT CLEARING HOUSE CARD SWITCH ATM SWITCH CSD SADC COUNTRY BANK A CMA RTGS RTGS RTGS RTGS RTGS CHEQUE/EFT CLEARING HOUSE RTGS CHEQUE/EFT CLEARING HOUSE CARD SWITCH ATM SWITCH SADC COUNTRY B BANK CARD SWITCH BANK ATM SWITCH CSD CHEQUE/EFT CLEARING HOUSE CARD SWITCH BANK CHEQUE/EFT CLEARING HOUSE CARD SWITCH BANK ATM SWITCH SADC COUNTRY C Source: SADC Banking Association SADC COUNTRY D

7 When the integration agenda got going As can be seen from the previous slides much progress has been achieved Using this situation as a base the CCBG then decided to move to the next phase in 2010 The next phase entailed inter-linking the financial infrastructures of the SADC countries The pre-planning phase commenced in late 2009

8 Key Strategic Principles 1. Project focus: cross border & intra-sadc transactions 2. Use of existing infrastructures wherever possible banks choose providers 3. Use of international standards to ensure interoperability 4. Invest for straight through processing 5. Each country will keep its own currency and financial infrastructure 6. Regional settlement currency to be the ZAR (South African Rand) 7. Start with Common Monetary Area and build out 8. Cross-border cheques to be phased out

9 Proposed Infrastructures The following key infrastructures were proposed for the SADC region: 1. A regional inter-bank settlement system to be run by the CCBG SIRESS 2. A regional clearing capability for EFT credits and debits 3. A regional clearing capability for Card/ATM transactions 4. A clearing and settlement capability for cross border securities transactions

10 Cooperation Between CCBG & SADC-BA Regulatory Issues & Settlement Infrastructure All Aspects Relating to Central RTGS CCBG Level Areas of Cooperation Payment Streams & Linkage to Settlement KEY DECISIONS AND PRINCIPLES ON PAYMENTS INTEGRATION CCBG & SADC-BA At commercial bank level ACH BANK CARD/ATM DVP/HVP BANK

11 CCBG ROAD MAP

12 Learning from Europe SADC focussed on the non-competitive space Mobile ATMs Internet Branch Banking 3 rd Party Outlets (retailers) Postal Networks Ecommerce Providers

13 Following Work Streams Identified

14 SADC Banking Association Organization The SADC Banking Association was given the mandate to develop the various payment processes and standards as well as self regulatory framework The SADC BA obtained funding from its members Members committed resources for each payment stream Each participating SADC country lead the work in a particular payment stream

15 SADC-BA Resourcing for the Payments Project CCBG Payments Sub-Committee SADC-BA In Country Payments Leader In country standards expert RTGS Experts Retail Payment Expert Sec DVP Expert Card/ATM Group Legal Group Bank Notes P2P Cheque Elimination

16 Stakeholders Stakeholders were identified Strategies were put in place to deal with each stakeholder group Excellent relationship with the CCBG sub- Committee Other have been more challenging other overlapping regions for example

17 SADC SEC: Trade Facilitation Trade Barrier payments trade finance, infrastructure finance INTERACTION WITH STAKEHOLDERS CCBG: Payments & Financial Markets Sub-committee Road Map Legal Implications Decisions & Principles for linkage to settlement Standards Governance SADCBA: Project Execution Dedicated Project Team Funding in place Project plan Approved SADC Secretariat CCBG SADC-BA Banks in SADC EAC, COMESA EAC COMESA Position Paper on implications and solutions for banks with multiple regional membership SADC Banks Securing Participation Business rules Governance Funding COSSE COSSE MOU Cooperation in the post trade settlement space (DVP) SAD 3rd parties ISO/SADC STAN 3 RD PARTIES: ECB, EPC, PCH s, CSD s, SWIFT, World Bank, etc. ISO/ SADCSTAN: Best practices Standards Adoption Advisory Setting up TC to drive Information Sharing standards adoption (ISOTC68) in SADC

18 Challenges of Regional Integration Lack of political will Fear of loss of sovereignty Countries at different levels of infrastructural development. Countries at different levels of institutional capacity. Larger economies marginalising smaller ones Big Brother syndrome or perception thereof. Challenges observed in other regions e.g. Euro- Zone

19 SADC BA Approach & Progress SADC Central RTGS Test with SADC Central RTGS & Operators Banks test with each other Select operators/ methods Agree message standards, rules Agree business flows Settlement P2P RTGS Cash EFT Card/ATM Cheque Forex DVP Set up payment stream groups

20 Where are we now? The SADC Integrated Real-Time Electronic Settlement System (SIRESS) went into production on 21 July 2013 The CMA countries i.e. Namibia, Lesotho, South Africa and Swaziland went live in 22 July 2013 System is stable and values/volumes have far exceeded expectations The process is simple and banks are now investing to Straight Through Processing (STP) into/out of core banking applications Cross-border cheques have been eliminated

21 SADC Inter-bank Transfer System A copy function is used in the process to ensure immediate settlement SIRESS Debit sending bank Credit receiving bank Copy of settlement detail sent to SIRESS Advice of settlement BANK SWIFT MT103/MT202 BANK Payment instruction from sending bank to receiving bank

22 Low value credit transfers This payment stream is now in implementation phase If all goes to plan the first transfers should take place in June 2014 Message format will be ISO 20022

23 SADC ACH Transfer System Daily clearing process SIRESS Send files to banks domestic transactions are kept separate from regional transactions Regional Automated Clearing House Domestic RTGS Send inter-bank settlement figures to SADC Central Bank in regional settlement currency Send files to banks If regional ACH processes transactions on behalf of banks in a particular country figures are sent in currency of that country

24 Direct debits The business model, operator model, mandate model and operating rules and standards have been finalised Implementation is scheduled for June 2015

25 Card based transaction Here SADC is working with VISA/MasterCard etc. to introduce regional settlement of their branded card transactions Operators in SADC are working on linking their domestic switches to enable external usage of domestic and other cards Implementation will be scheduled once all relevant models and, agreements and documents have been completed

26 Possible hub and spoke model or card Regional transactions Processed ITO regional clearing message standards and rules Bankserv transactions Zim Switch Switch Hub Issuing banks to negotiate with accepting banks to accept their proprietary cards Malswitch All domestic switches switch domestic and settle domestic through domestic RTGS Govern ance SADC self governance structure Namclear SIRESS Settle regional transactions

27 Cash leg of securities transactions SADC BA and a work group from the Committee of SADC Stock Exchanges (COSSE) are working on the business model and related agreements, rules etc. for the settlement of the cash leg of securities trades. Cash dividends will also be settled via SIRESS Implementation will be scheduled once all models, agreements etc. have been signed off.

28 Client Proposed SADC Securities DVP Model Client Namibia Custodian Namibia CSD Receive vs payment instructions Report Trades Trade Match/ Clear/ Settle Operator Deliver vs payment instructions RSA Custodian RSA CSD Namibian Commercial Bank SIRESS Fund a/c at SIRESS RSA Commercial Bank

29 Where to next? Four non-cma countries will be brought into the SIRESS Settlement System in the first quarter of next year The remaining non-cma countries will be scheduled thereafter Other payment streams (retail) will be implemented in 2014/2015

30 Questions