An African single cross border settlement service that's a success

by Trust Matsilele 0

Southern African Development Community (SADC) Integrated Regional Settlement System (SIRESS) has been lauded by delegates addressing SWIFT’s African Regional Conference in Cape Town.

SIRESS provides a single cross border settlement service for the SADC countries. The service is available to banks and supervised financial institutions.

Hugo Smit, head of Sub-Sahara Africa for SWIFT, said that the system is now processing about 43 per cent of the transactions in the SADC region.

“This is a huge achievement in a relatively short time,” he said.

Maxine Hlaba, managing director of the SADC Banking Association (BA) Secretariat said, currently it has nine participating countries but she said ultimately the association hoped all banks in SADC’s 15 countries will participate.

This year, the SADC BA is looking to bring on board the Seychelles and Madagascar. It is hoped the DRC will join early next year.

“We have seen the volumes grow tremendously; at the end of last month we reached a milestone of one trillion rand. We did not rush to get everyone to join the system as joining requires capital investment and the ability to implement all the right standards,” she said.

Tim Masela, head of the national payments system, South African Reserve Bank, said political will from governors of all the central banks concerned has been critical in ensuring the project is successful.

“We leveraged the existing infrastructure and our investment in SWIFT, which has made the system cost effective. This is a journey that can be made easy if there is collaboration and shared responsibility across the region to make sure it becomes a success,” he added.

Vickey Ganesh, head of enterprise payments services at Standard Bank, said for South African banks there are two particular issues to address:

“The first is around liquidity. They are operating on two systems, one in South Africa, which is funded via collateral, and one for SADC/SIRESS, which has a cash funded mechanism. This means we have to manage liquidity very carefully across both systems on a real time basis,” he said.

“There is also an impact on business. Before the advent of SIRESS, South African banks were often offering their correspondent banking relationships nostro services in rand. Now that many of the commercial banks are operating directly on the rand based system, not as many nostro services are required,” he added.

“South African banks are definitely feeling the pinch. There is a cost associated to that,” he said.

Josephat Mutepfa, deputy director financial markets, Reserve Bank of Zimbabwe said the outcome of SIRESS has been positive.

“About 90 per cent of the country’s banking sector is on SIRESS, the response has been very positive,” he said.

“There are hopes that SIRESS will help to drive down costs in the system and therefore reduce costs for end customers. The rails are in place, but we need more vehicles on the rails. We need the right products and services.”

Mutepfa added that more than 70 per cent of people in the SADC region do not have banking facilities and he believed SIRESS and SADC more broadly can play a pivotal role in bridging that gap to improve financial inclusion in the region.