Dr. Gabriel MOUGANI Chief Regional Integration Coordinator West Africa Regional Development and Business Delivery Office (RDGW)

Transcription

1 Financing Development: Experiences from Africa, Asia and Latin America The African Development Bank s role and experiences in supporting regional payments systems programs & initiatives in Africa: key issues, lessons learned & recommendations Dr. Gabriel MOUGANI Chief Regional Integration Coordinator West Africa Regional Development and Business Delivery Office (RDGW) African Development Bank (AfDB) Group 1

2 Outline 1. The AfDB s mission and New Vision 2. The AfDB role in supporting regional payment systems (RPS) programs & initiatives in Africa 3. Selected experiences Project to reform systems & means of payment in WAEMU Project for Mobile Money Interoperability in WAEMU Project to promote access of MFIs into the WAEMU RPS WAMZ Payments System Development Project EAC Payment and Settlement Systems Integration Project SADC Regional Payment System (SADC BA & SACHA 2020 Payment Road Map) 4. Lessons learned & recommendations 5. Potential areas for policy support 6. Selected references 2

3 What are the AfDB s missions? Help to reduce poverty and improve living conditions on the continent Help RMCs (and RECs) to achieve their development goals Promote investment in projects and programs that are likely to contribute to economic and social development 3

4 The New Vision of the AfDB: alignment with the AfDB s Long Term Strategy ( ) focusing on five priority areas, referred to as the High Fives (High 5s): 4

5 Supporting Regional payments systems Why the AfDB is supporting regional payments systems (RPS) programs & initiatives in Africa? [1] Complement domestic payment and settlement systems Make financial systems innovative, robust, and competitive both nationally and regionally Reach people and businesses through expanded financial infrastructure Innovate in financial and payment systems to facilitate remittances, cross-border financial flows and trade Increase access to the underserved Reduce poverty and promote social & economic development 5

6 PILLARS Why the AfDB is supporting regional payments systems (RPS) programs & initiatives in Africa? [2] Vibrant, innovative, robust, and competitive financial systems both nationally & regionally OBJECTIVE To contribute to increasing access to finance, deepening Africa s financial institutions and markets at RMCs and regional level while supporting financial stability PILLAR I Increasing access to the underserved PILLAR II Broadening and deepening Africa s financial systems Schematic summary of the AfDB s Group Financial Development Policy and Strategy

7 How the AfDB is supporting regional payments systems (RPS) programs & initiatives in Africa? [1] Policy Action Frameworks Capacity Building /Governance Advocacy Financing 7

8 How the AfDB is supporting regional payments systems (RPS) programs & initiatives in Africa? [2] Examples of policy action frameworks Sharpen Regional Action Plans Coordination of regional & national reforms Coordinated national Action Plans 8

9 How the AfDB is supporting regional payments systems (RPS) programs & initiatives in Africa? [3] Examples of Capacity Building/ Governance Strengthen regional secretariats and other regional institutions capacity Strengthen national coordinating body capacity Strengthen Central banks capacity (Supervision & regulation, Harmonization of regulatory frameworks, etc.) Strengthen Supervisory bodies capacity (Supervision & regulation) Strengthen other financial institutions capacity 9

10 How the AfDB is supporting regional payments systems (RPS) programs & initiatives in Africa? [4] Examples of Advocacy Policy dialogue Monitoring & Evaluation mechanisms Technical assistance & monitoring 10

11 How the AfDB is supporting regional payments systems (RPS) programs & initiatives in Africa? [5] Examples of Financing instruments Financial assistance Grants Loans Consultants Experts, etc. Regional institutions Etc. Regional/national institutions Private institutions 11

12 3. Selected experiences Project to reform systems & means of payment in WAEMU Project to promote access of MFIs into the WAEMU RPS Project for Mobile Money Interoperability in WAEMU WAMZ Payments System Development Project EAC Payment and Settlement Systems Integration Project SADC Regional Payment System (SADC BA & SACHA 2020 Payment Road Map) 12

13 Map of the West Africa 13

14 West Africa Economic and Monetary Union (WAEMU) Region WAEMU (Benin, Burkina Faso, Côte d Ivoire, Guinea- Bissau, Mali, Niger, Senegal and Togo) : WAEMU Landscape: Population : +110 million 24 million mobile money users 33 mobile money deployments Over 10 mobile money cross border corridors 106 Banks and over 700 MFIs 14

15 Project to reform payment systems & instruments in WAEMU countries [1] Project similar to the Economic and Monetary Community of Central Africa (CEMAC) Regional Payment System (RPS) project 1. Harmonized legal framework for payments 2. Foster secure, efficient and affordable payments OUTCOMES Financial inclusion Improved usage of electronic payments RTGS 2004 ACH checks 2006 ACH cards

16 Project to reform payment systems & Lessons learned & recommendations instruments in WAEMU countries [2] Key Success factors: - Institutional framework (common central bank BCEAO, single currency) - Harmonized regulatory framework - Project led by BCEAO - Capacity of CB staff

17 Digital Payments Interoperability in WAEMU [1] OBJECTIVE: Facilitate interoperability of payments and transfers within the countries in the region and across their borders in order to reduce financial exclusion 17

18 Digital Payments Interoperability in WAEMU [2] 1. Achieve lost cost digital transactions 2. Foster fair competition among players EXPECTED OUTCOMES Improved financial inclusion Improved use of mobile money services 18

19 Project to promote access of Microfinance institutions into the WAEMU regional payment system [1] (New WAEMU Regional Payment eco-system) Clearing & Settlement environment (BCEAO + Banks) MFIs Non-bank payment services Banks Central Bank (BCEAO) Lighter regulatory oversight of RPS participants beyond this point Strict regulatory oversight Clearing & Settlement environment 19

20 Project to promote access of Microfinance institutions into the WAEMU regional payment system [2] 1. Facilitating access by MFIs to the WAEMU Regional Payment System 2. Improvement & Broadening the range of products & financial services offered by MFIs EXPECTED OUTCOMES Improved financial inclusion Improved regional financial flows & formal intra-regional trade Improved use of mobile money services 20

21 Project to promote access of Microfinance institutions into the WAEMU regional payment system [3] Component I Upgrade MFIs Management System and Capacity Component II Improve Indirect Access by MFIs to the WAEMU Payment System Provide and Popularize MFIs products & services (including Mobile Banking and Rural Banking) Component IIII Project Management 21

22 New products & financial services offered by MFIs Project to promote access of Microfinance institutions into the WAEMU regional payment system [4] Cards Prepaid cards and electronic purse Mobile Banking Cashless payment facilities (especially in rural areas) 22

23 Project to promote access of Microfinance institutions into the WAEMU regional payment system [5] KEY PERFORMANCE INDICATORS Baseline Indicators (including ISC) Situation Target Percentage of the population with access to MFI financial services Number of MFIs connected to the WAEMU Regional Payment System Volume of transactions carried out with prepaid cards and electronic wallets issued by MFIs Volume of Mobile Banking and Rural Banking services 16.6% (March 2015) Zero Less than 10% Almost zero About 25% of the population (including disadvantaged segments) (August 2019) About 50% of women have access to new financial products and services at the end of August 2019 About 10% of MFIs are connected to the payment system at the end of August % of transactions carried out with bank money by MFIs 20% of the volume of transactions for Mobile Banking and Rural Banking services Number of prepaid cards, electronic wallets and Mobile Banking or Rural Banking services issued or distributed by MFIs Negligible number (below 1% of total) 10% of total prepaid cards, electronic wallets and Mobile Banking or Rural Banking services issued or distributed by MFIs Secured inter- and intra-waemu member country payment flows from MFIs NA 10% of inter- and intra- WAEMU member country payment flows from MFIs 23

24 West Africa Monetary Zone (WAMZ) Payment System Development [1] Countries: Gambia Guinea Sierra Leone Liberia Status : ongoing (original grant amount approved in July 2008) Borrower / Grant Recipient / Implementing Agency: West Africa Monetary Institute - WAMI 24

25 EAC Payment and Settlement Systems Integration Project [1] Countries: Burundi Kenya Rwanda South Sudan (1) Tanzania Uganda (1) South Sudan officially joins East African Community on 15 th April 2016 Borrower / Grant Recipient / Implementing Agency: East African Community - EAC 25

26 EAC Payment and Settlement Systems Integration Project [2] Component1: Integration of financial market infrastructure Component 2: Harmonization of financial laws & regulations Component 3: Capacity building 26

27 EAC Payment and Settlement Systems Integration Project [3] Status: Timeline: The PSSIP is scheduled to be completed by December 2016 with last disbursement in June 2017, but the adjustments in allocations will require an extension. Additional requests for allocation of funds: The national Central Banks requested that a number of new projects be funded (these requests in total exceed the available funds for the project). Most importantly, there is strong consensus for a much more robust and formally organized capacity building focused on the Central Banks themselves. 27

28 SADC Regional Payment System (SADC BA & SACHA 2020 Payment Road Map) [1] The 2020 Blue Print Engagement & Country Support into Regional support Retail payments go digital new form of payment - more efficient - faster availability of funds No more cheques Total acceptance of shared infrastructure strategy Benefits include economy of scale and efficiencies 28

29 SADC Regional Payment System (SADC BA & SACHA 2020 Payment Road Map) [2] Domestic Retail Payment Processing Infrastructure 2020 Associated services Payment Streams Input/output participants Limits Management Cash Clearing Debit Mandates A N Other Credit push transfers Card initiated payments Direct debits Cheques These can be provided on multi country shared platforms Banks Government Other Authorised Non-banks 29

30 4. Key issues, lessons learned & recommendations [1] Key issues WAEMU Fragmented financial sector dominated by the banking sector (dominance of foreign-owned banks) Significant cross-country variations in bank and non-bank financial institutions soundness Financial Education and access to financial services 30

31 4. Key issues, lessons learned & recommendations [2] Key issues WAMZ and EAC Unrealistic schedules, which inevitably lead to the postponement of deadlines Weak progress toward the fulfilment of the prerequisite conditions for the establishment of a RPS Limited human resources and technical capacity (of regional institutions) 31

32 4. Key issues, lessons learned & recommendations [3] Key issues WAMZ and EAC Weak coordination between regional institutions and national central banks of the region Weaknesses in harmonization of the banking and non-bank financial institutions sectors regulation and supervision 32

33 4. Key issues, lessons learned & recommendations [4] Key issues WAMZ and EAC Existing restrictions on the movement of capital Currency convertibility Cross-border supervision and regulation of the banking system Financial Education and access to financial services 33

34 4. Key issues, lessons learned & recommendations [5] SADC Key factors of success Sound, participatory and gradual approach, involving all of the stakeholders at the national and regional levels Key issues Different levels of development of domestic payment systems Some of the national currencies in SADC are not convertible Exchange rates of most of the currencies are not market determined his objective raises issue of building a RPS with multiple currencies 34

35 4. Key issues, lessons learned & recommendations [5] Lessons learned & recommendations Pragmatic, gradual and realistic approach Adequate preparation, appropriate sequencing of reforms and realistic schedules Efficiency of business models Harmonization of legal frameworks 35

36 4. Key issues, lessons learned & recommendations [6] Lessons learned & recommendations Capacity (regional and national institutions) Importance of stakeholder alignment (including political authorities, market participants, e.g., financial sector institutions, private sector, etc., public; and development partners) 36

37 4. Key issues, lessons learned & recommendations [7] Lessons learned & recommendations Coordination of monetary and financial policies Coordination of exchange rate policies and exchange regulation policies Coordination of financial infrastructure development Harmonization of regulations relating to the supervision and regulation of financial systems 37

38 4. Key issues, lessons learned & recommendations [8] Lessons learned & recommendations Pricing (promote affordable prices and transparency) Boost financial inclusion Support financial literacy -models -Harmonization of legal frameworks 38

39 5. Potential areas for policy support [8] Include financial markets to the domestic/regional payment systems Facilitate infrastructure financing Facilitate trade finance and regional projects financing Facilitate financing of social sectorsof legal frameworks 39

40 6. Selected references AfDB, 2014, Financial Sector Development Strategy and Policy, Abidjan. AfDB, 2013, Long Term Strategy, Tunis. AfDB, 2010, Financial Sector Integration in Three Regions of Africa (AMU, CEMAC and COMESA), Tunis. Mougani, G., 2014, Challenges towards Regional Financial Integration and Monetary Coordination in the West African Monetary Zone and the East African Community: Analysis and Policy Recommendations, Regional Integration Policy Paper, N 003 May, African Development Bank. SADC BA & SACHA, 2020 Payment Road Map, Johannesburg, SADC Payment System Integration workshop, August 2016 World bank, 2007, Financial sector integration in two regions of Sub- Saharan Africa, Washington. 40

41 Thank you For further information, please contact: Gabriel V Mougani Chief Regional Integration Coordinator Tel: + (225) Skype: gabriel.mougani2 g.mougani@afdb.org Building today, a better Africa tomorrow 41