23 May 2013

Modern technology infrastructure can help bridge the digital gap and further enhance trade within Africa, says Bank of Botswana (BoB) governor, Ms Linah Mohohlo.

Speaking at a SWIFT African conference gala dinner on Wednesday, Ms Mohohlo said Information and Communication Technology (ICT) rendered payments more efficient and cheaper at all levels. She said ICT-based financial transactions infrastructure was critical for progress in driving forward the process of development and integration.

However, there were some challenges. “Many in Africa share a common experience of inadequate infrastructure, whether it be for transport, communication or making payments,” she said. She said there was need to change the current situation, where the continent remained more directly linked with developed countries than with its constituent nations.

“It is not unusual to have better flight connections between African countries by first going to Europe. Indeed not so long ago, intra-continental telephone communications were routed through London, Paris, Madrid or Lisbon,” she said.

Ms Mohohlo said infrastructure development in Africa was done with the aim of promoting trade with the developed world, such that many rivers marking national boundaries still did not have bridges. She said the bottlenecks were further compounded by weak or even non-existent direct border payments infrastructure between countries.

It was quicker to make payments to Europe or North America and other developed markets than across borders within Africa, she said. Furthermore, she said this was either because many of the banks and financial institutions were mostly of European or North American parentage or it was due to better technological linkages with the developed world.

Ms Mohohlo said it was however pleasing as efforts to redress the infrastructure deficit were gathering momentum through the established efforts such as African Development Bank (AfDB) or the proposed Brazil Russia India China South Africa (BRICS) Development bank. She said the advances in ICT, was beneficial to African countries where banks continued to be spread thinly across people’s settlements, particularly in rural areas.

“In this case, cellular phone networks are enabling previously excluded segments of society to access financial services, mainly through money transfer facilities, but increasingly through other features associated with traditional banking,” she said.

The governor said Botswana was making progress as it was in the process of modernising the payment system. “We have now electronically automated the Clearing House and this reduced the cheque clearing period to only a few days.

The objective was to reduce the clearing period further to one day when the cheque imaging and truncation technology is in place,” she said. Ms Mohohlo said large volume of payments in excess of P500 000 were made electronically and in this way benefiting government and large corporations, given the improved speed and security as the risk of fraud was reduced.

“Internet banking, using a desktop computer, is complimented by mobile phone transactions for paying utility bills, money transfers and managing bank accounts,” she said.

She said many pensioners and beneficiaries of government social security programmes were able to access their entitlements through smart card technology that was operated by local shops and businesses, irrespective of their place of abode.

This enabled people located far from developed parts of the country to have access to financial services and people were no longer required to travel long distances to go to banks or pay bills, she said.

The governor said cross border payments had also been facilitated, adding in the SADC region, the payments integration project is well underway and the SADC Integration Regional Electronic Settlement System (SIRESS), is expected to be commissioned later this year.

She said the support from SWIFT was much needed to enable the continent to leapfrog into transactions that no longer depend on physical exchange of cash. ENDS