A review of payments interoperability in the Southern African Development Community region

Transcription

1 Journal of Payments Strategy & Systems Volume 6 Number 2 Journal of Payments Strategy & Systems Volume 6 Number 2 A review of payments interoperability in the Southern African Development Community region Brad Gillis and Rishi Pillay Received (in revised form): 13th April, 2012 BankservAfrica, 243 Booysens Road, Selby, Johannesburg, 2001, South Africa. Tel: ; Fax: ; rìship@bankserv.com Brad Gillis Rishi Pillay Journal of Payments Strategy & Systems Vol. 6, No. 2, 2012, pp Henry Stewart Publications, Brad Gillis has been in the payments industry for the past 13 years, joining FirstRand in 1998 as CFO (chief financial officer) and business owner of FNB s electronic banking business, where he was instrumental in merging the payments businesses within and across the group. In 2004, Brad joined the SA Payments Strategy Association (SAPSA), becoming head of SAPSA in SAPSA focused on leading strategy for the payments industry, particularly in the interbank environment. He moved over to BankservAfrica in 2008 as head of the business division, responsible for the company s new business growth, product support and client relations, and the company s strategic marketing direction. In 2010, BankservAfrica restructured into fully accountable business units and rebranded in line with its broader 2014 strategy. As part of this restructure, Brad was appointed CEO Regulated Products, which includes all of BankservAfrica s clearing and settlement valueadded products. Rishi Pillay is the CEO of the Funds Transfer Business Unit within BankservAfrica. He has over 16 years experience within the banking industry, having fulfilled senior management roles across retail banking, operations, product management and IT. He has worked extensively in South Africa and the Southern Africa Development Community (SADC) region and is passionate about the market dynamics of the region, especially the lack of access to convenient, cheap payment mechanisms to the majority of the underbanked and unbanked populations. Rishi has academic qualifications from leading universities in South Africa, the UK and the USA covering business management, strategy and innovation. ABSTRACT Payments interoperability is a concept that is widely misunderstood, or at the very least, considered in a very narrow sense. The authors hope to provide an extensive explanation of the concept and to highlight the conditions necessary to achieve interoperability as well as the pervasiveness in the SADC Region. The authors will present a vision for payments interoperability in SADC based on a five-tier model that encompasses socio-economic, technical and regulatory issues. The envisaged benefits to the region are described in some detail, and readers will get a sense of some of the current developments that form the basis for the future payments regime of SADC. The proliferation of electronic payments in order to achieve cash displacement is deemed possible only with an effective cross border, multi-currency interoperable payments environment. The authors wish to promote awareness; debate and action that will ultimately see an efficient payments system contribute to the growth of the region and the uplift of the living standards of its residents. Page 144

2 Gillis and Pillay Figure 1 A vision for payments interoperability in the SADC region Keywords: payments interoperability, SADC, Southern African Development Community, ISO20022, interchange, regulatory framework, electronic payments, mobile payments INTRODUCTION Interoperability refers to the ability of diverse systems and organisations to work together ( inter-operate ). The term is often used in a technical systems engineering sense, or alternatively in a broad sense, taking into account social, political and organisational factors that affect system to system performance. With payments, factors to consider are multiple currencies, geography, language, financial services providers, interchange, governments, fiscal and monetary policies, and that is before even considering the technicalities of IT protocols, operating systems, devices and communication protocols. According to the Bank for International Settlements (BIS), payment system interoperability is: One of the principal components of a country s monetary and financial system and, therefore, crucial to a country s economic development. It is through the national payment system that money is transferred between buyers and sellers in commercial and financial transactions. If done well, the development of the national payment system can reduce overall transaction costs and expand the opportunities for commercial and financial transactions in an economy. 1 The Southern African Development Community (SADC) Committee of Central Bank Governors recognised that key to the region s growth and monetary union ambitions is the establishment and improvement of payments, clearing and settlement, including interoperability both within and across the countries within the SADC. Page 145

3 Payments interoperability in the SADC region The aim of this paper is to examine the current conditions and progress towards payments interoperability in the SADC region (see Figure 1). The authors examine the existing environments in terms of: sound regulatory and legal frameworks; integrated financial infrastructure; common payments standards; cross-border settlement and clearing; economic considerations. BENEFITS OF INTEROPERABILITY TO THE SADC In general, SADC payment systems remain fragmented, inefficient, costly and underdeveloped. This is a key impediment to intra-regional trade and an obstacle to achieving a single common market in the region. Most SADC economies, from a retail perspective, are cash based, involving a lot of paperwork to effect payments and transact business across borders. This renders the payment system very costly and inefficient. In addition, with the exception of South Africa and one or two other countries, payment systems in the SADC are very small in scale, fragmented and lack competition, resulting in inefficiencies and high transaction costs. The development of payment systems is closely associated with the movement of goods, services, capital and people. An efficient payment system reduces costs and delays in effecting transactions as well as minimising the risks of holding cash, such as theft, currency counterfeit, and loss of interest and exchange rate value. Developed, integrated payment systems promote cross-border trade, intra-regional trade and regional integration. This is because of: the efficiency of circulation of goods and services; the pace of economic expansion due to enhanced competition; improved efficiency and productivity; minimised transaction costs; improved trust in the security and reliability of payment instruments. Indirectly, there are other benefits of strengthening payment systems that can help promote intra-regional trade, such as: facilitating sound monetary policy and liquidity management; improving the management of both credit and systemic risk as a result of value transfers being completed efficiently and within acceptable timescales; enhancing monetary and financial sector integration; expediting customs processing and government transactions; supporting foreign exchange trading; facilitation of financial sector development by the introduction of new financial instruments, products, institutions and markets. 2 SOUND REGULATORY AND LEGAL FRAMEWORKS A fundamental aspect to achieving and enabling the desired benefits is the establishment of a sound regulatory environment both within the SADC participating countries and across them. Figure 2 describes the various and often diverse number of participants/stakeholders in a national payment system, each fulfilling a specific function in the value chain. These range from the Real- Time Gross Settlement (RTGS) environment (which in most cases is controlled by the central bank) to the clearing houses facilitating retail payment clearing for authorised participants, to the system operators and third-party payment service providers who service the retailer, Page 146

4 Gillis and Pillay Participants in the SA national payment systems (similar arrangements could be expected in other jurisdictions) Figure 2 Participants/stakeholders in a national payments system Source: consumer or corporate with payment services. These factors are no less important when it comes to making cross-border payments and, in particular, within regions wishing to promote and sustain hubs of economic activity and growth (Figure 3). Establishing the correct levels of regulatory oversight that ensure acceptable arrangements for management of risk while still stimulating active use of the platform(s) is key. Cooperation and the political will to succeed are also absolute imperatives. The balance Achieving the balance between managing risk and stimulating market demand of an established payments platform is key. Ensuring the existence of an environment that promotes innovation is also essential, especially given modern technology and the resultant payment system convergence being experienced. The responsibility of devising and implementing a regional payment strategy to achieve this lies primarily with the central banks and the established regional mechanisms. Trust and acceptance To achieve levels of trust and acceptance of the newly created regional payment system platform by country, regional and international participants, there are a number of criteria to consider: regulation that promotes and ensures a safe and sound operating environment; effective, efficient and compliant oversight and monitoring regulation, which is fit for the purpose of the various payment systems it serves; in-country and regional interoperability through open, flexible and common standards; appropriate, cost-effective systems and services; use of shared infrastructure and payment capabilities that are world class and have a proven record of sustained delivery and reliability; an adaptable capability that can quickly adjust to changing market conditions and innovations; adoption of a phased approach such as one through the common monetary area (CMA), providing a platform to: test the system concepts of regional Page 147

5 Payments interoperability in the SADC region Figure 3 A proposed regional regulatory framework for payments in the SADC region clearing and settlement create confidence in a regional settlement environment break down barriers and misconceptions. INTEGRATED FINANCIAL INFRASTRUCTURE Financial infrastructure, broadly defined, forms the underlying foundation for a country s financial system. It includes all institutions, information, technologies, rules and standards that enable financial intermediation. Poor financial infrastructure in many developing countries poses a considerable constraint on financial institutions to expand their offering of financial services credit, savings and payment services to underserved segments of the population and the economy. A sound payment system can mitigate financial crises by reducing or eliminating settlement risk related to financial market transactions, in particular credit, liquidity and operational risks. One of the main sources of settlement risk in the payment system could be operational risk. Operational effectiveness ensures the circulation of funds in the financial system and efficient liquidity management by participants. Operational risk emanating from the payment system infrastructure should therefore be well managed and minimised. Page 148

6 Gillis and Pillay Figure 4 ATMs per million people Figure 5 POS per million people SADC integration Regional payment system infrastructure integration could provide many benefits, including network externalities, interoperability, reduced capital investment by the region and standardised payment system risk-reduction measures. Regional infrastructure integration could also result in disadvantages, such as concentration risk. In order to enhance the operational effectiveness of the regional payment system and to address concentration risk, adequate BCP and DR arrangements need to be in place in the region. 3 Financial infrastructure is critical for the efficient provision of and access to financial services. Innovations in payment systems can help to reach customers where bank branches do not exist, as with automated teller machines, mobile banking and other point-of-sale arrangements (Figures 4 and 5). According to the World Bank Payments survey 2008, 4 financial infrastructure in the SADC region shows a high degree of asymmetry both across countries and within them. South Africa, Mauritius and Botswana have the most developed infrastructures, but even within these economies there is a stark contrast between rural and urban development. The statistics below support this view. Substantial development, however, has and is taking place in many of the SADC countries. The impact of mobile New technologies, such as mobile bank- Page 149

7 Payments interoperability in the SADC region Figure 6 Mobile phones per thousand people Figure 7 Global mobile connections by region (millions) ing, provide opportunities to capture funds digitally, which can contribute to the monetary base in the economy. Since the number of people with cell phones in many economies far exceeds the number of those with bank accounts, this new distribution mechanism offers great potential. Africa is the second largest mobile market by connections and the fastest growing (649 million connections in Q4 for 2011 and will reach 735 million by the end of 2012) in the world (according to the GSMA report released in November ) (Figures 6 and 7). Mobile phone penetration in the SADC is significantly higher than financial services penetration. Mobile is also playing an increasingly important role in remittance payment facilitation. Although remittances are centred on cash and movement of cash, through mobile technologies, they can also become a likely cash displacement catalyst to stimulate market adoption of other Page 150

8 Gillis and Pillay financial payments and banking facilities as the need presents itself. Platform stimulation Achieving the establishment of an effective and efficient payment infrastructure platform is only part of the solution; stimulating demand for the use of the platform is also an obvious requirement and an area where the regulators and governments can play significant roles: regulators: through ensuring robust, balanced regulation that does not burden low-risk, cost-sensitive payment systems such as micro payments and remittances governments: as large human resource employers, encouraging the migration of salary credits or payments from cash and cheques (which are easily cashed) to bank account deposits. COMMON PAYMENT STANDARDS Common standards enhance the operational effectiveness and interoperability of the payment systems. Standards are defined as minimum requirements regarding infrastructure and design (eg technology, security and payment products) and business aspects (eg practices and arrangements) of the payment system industry. Standards ensure a common understanding of requirements. A major objective of implementing standards is to enhance security within the payment system. These standards focus on, among other things, the prevention of fraud, increasing trust, integrity, access to and confidence in the payment system. 6 Standards for payment messages have been touted as significant enablers in terms of innovation, global interoperability, competition, efficiency and cost reduction. Common standards will enhance security and interoperability in regional payment systems. Payment message formats ISO is an extensible Markup Language (XML) schema for the development of financial messages. This structure is capable of supporting multiple payment types and forms the backbone of payment messaging required to support Single Euro Payments Area (SEPA) integration in Europe. The result is a groundswell of major payment market participants investing in ISO The rationale for adopting this standard is that payments represented in this structure can be mapped to the data requirements of any major clearing system or payments process. In other words, it forms the core of payment processing and offers the possibility of true global payment services interoperability. The SADC Payment System Project has adopted the ISO standard as the basis for developing financial messages, at least in the retail payments environment. South Africa leads the way in terms of reengineering message formats to adhere to the ISO standard. International Payments Framework The International Payments Framework (IPF) initiative through the International Payments Framework Association (IPFA) includes members from various nations (including the SADC) and aims to develop rules for the exchange of cross-border electronic fund transfers. Organisations comprising the IPF include primarily financial institutions and Clearing and Settlement Mechanisms, as well as associations, standard-setting bodies, industry vendors and other users of payment services. The IPF is seeking to enable better interoperability between existing domestic and/or regional payment systems. As such, it seeks to establish rules and procedures for the exchange of transactions in multiple currencies based on existing clearing and settlement practices internationally. Page 151

9 Payments interoperability in the SADC region CROSS-BORDER CLEARING AND SETTLEMENT Cross-border payment, clearing and settlement systems in the SADC are paramount in enabling the safe and efficient circulation of money, thereby facilitating regional economic development. Sound SADC payment, clearing and settlement systems will enhance regional financial stability by providing, among other things, appropriate SADC payment system risk-reduction measures. The general consensus within the SADC is that the credit-push payment principle is the preferred payment method and electronic instruments are preferred to paper-based instruments. According to the National Payment System Framework and Strategy, Vision 2015 of the South African Reserve Bank, 7 critical success factors include: SADC stakeholder interaction, cooperation, support and commitment from all relevant authorities harmonised SADC payment system legal frameworks in all jurisdictions availability of management information systems allowing each country s clearing and settlement position to be visible harmonised payment, clearing and settlement standards in the SADC. Remittances Cross-border remittance payments are defined as person-to-person payments from senders in one country to recipients in another. In the 2010 Remittance Prices Worldwide Database, the World Bank identified 29 countries as major remittance sending countries. South Africa is the major remittance sending country in the SADC. Through the proposed anti-moneylaundering and exchange control relaxation by the South African Financial Intelligence Centre and the South African Financial Surveillance Authority, remittances flowing through informal channels can be brought under formal regulatory oversight. Efficiency and security of crossborder payments For cross-border payments, the transfer mechanism is considered most efficient when the various players in the value transfer chain, from retail service to end users through to settlement services for each leg of the payment, are linked through contract or partnership and technical connectivity. This requires some degree of harmonisation of standards for interoperability and interconnectivity. The absence of a minimum required degree of harmonisation and standardisation in the retail payment systems of the receiving and sending countries is the principal source of difficulty in creating efficient crossborder payment mechanisms for retail payments. Standardisation promotes effective competition among the various payment service providers and their transfer channels in each corridor, which typically improves service cost and speed of delivery. Standardisation can also improve other aspects of end-to-end efficiency and safety, eg standardised messaging formats used by correspondent banks to generate fewer misdirected payments. Similarly, standardised payment instruments and transaction systems that allow greater interoperability of front-end networks create more convenient access to services and funds, especially at the receiver end of the transfer. ECONOMIC CONSIDERATIONS The core economic factors and their influence on development in the commercial, industrial and financial sectors are particularly relevant to the payment service needs and capabilities of the country. The Page 152

10 Gillis and Pillay Figure 8 SADC average economic growth rates Source: World Economic Outlook, June 2011 update SADC countries differ widely in terms of these factors. Of the 15 member countries, six are landlocked, six have populations below ten million people, ten have economies smaller than US$10bn per annum, and several rely on transnational river basins for their water. South Africa is the economic anchor of the region, but half a dozen of the SADC s member states are large or potentially large economies (including Angola, the Democratic Republic of Congo, Mozambique, Tanzania, Zambia and Zimbabwe). Principal economic factors influencing national payment system development include the following. The level and stability of overall economic growth. Economic activity in the SADC region picked up in 2010 following a slow down experienced in 2008 and 2009 as a result of the global economic and financial crisis (Figure 8). The reacceleration in economic activity in the SADC region was driven by recovery of the global economy. This recovery helped to stimulate rising external demand, firming of international metal prices, rising global incomes, resurgence of capital flows to the region, as well as sound macroeconomic policies by SADC member states. The global economic growth rebounded from a negative growth of 0.5 per cent in 2009 to a strong growth of 5.1 per cent in 2010, presenting immense post-crisis growth opportunities for the SADC. In response to these positive growth factors, economic activity in the region grew by 5.4 per cent in 2010, compared with a growth of 2.3 per cent in Wealth distribution. Average per capita income in the SADC region increased by more than 12.1 per cent from US$3,082 in 2009 to US$3,456 in 2010 (Figure 9). The increase in per capita income in 2010 mainly reflects improved economic activity in the region following sluggish growth in Botswana, Mauritius, Seychelles and South Africa are leading other countries with per capita incomes greater than US$7,000 in Angola, Lesotho, Namibia, Swaziland and Zambia also enjoy relatively high per capita incomes in excess of US$1,000. Page 153

11 Payments interoperability in the SADC region Figure 9 SADC per capita income (US$) Source: SADC Central Banks and World Bank (Seychelles) The rest of the countries have less than US$1,000 in per capita income. The education and skill levels of, and availability of training facilities for, the labour force. The SADC countries differ vastly with respect to education and skills levels, both across and within countries. Class differences and skewed wealth distribution restrict access to quality education and training. Quality of government education is often poor and does not reach the entire population. Private/public sector cooperation is almost non-existent, resulting in a disconnect between skills training and availability. The development of industrial infrastructure such as telecommunications and transportation systems. Over the period , infrastructure improvements have boosted southern Africa s growth by 1.2 percentage points per capita per year. This positive growth effect has come almost entirely from the growth of mobile telephony; improvements in the road network made small contributions. Inadequate power infrastructure has eroded growth more in southern Africa than in other parts of the continent. If southern Africa s infrastructure could be improved to the level of the strongest-performing country in Africa (Mauritius), regional per capita growth performance would be boosted by some 3 percentage points. The SADC offers the best access to information and communications technology (ICT) services of any regional economic community, but these services are priced high. The telecommunications market in the SADC has been open to foreign investors since the early 1990s and several large companies dominate the market. Three countries gained access to a submarine cable, and several more will be connected through projects that are under way. No landlocked country has been connected as Page 154

12 Gillis and Pillay yet. Creating competition among landing stations is critical to providing an affordable service. In order for the benefits of submarine access to spread throughout the region, it is necessary to complete the 5,100 missing kilometres of terrestrial fibre optic network. Associated investments are small, and anticipated returns on reducing the price of broadband access relatively high, with payback periods of less than a year. Completing and preserving the SADC s regional ICT, power and transport backbones would require sustained spending of US$2.1bn annually over the course of a decade. This is about 7 per cent of the overall infrastructure spending requirements (regional and national) for the SADC region as a whole. Of the total US$2.1bn, around US$1.6bn a year is associated with investment in new regional infrastructure assets, while the balance of US$0.4bn is needed to maintain the regional network in perpetuity once established, most of it being associated with road maintenance. By far the largest item on the regional spending agenda is the power sector, with specifically regional power assets demanding US$1.4bn per year over the next decade. The transport sector comes in second place, with an annual spending requirement of US$0.3bn. The pace of innovation and technological change. A Protocol on Science, Technology and Innovation (STI) was signed by Heads of State and Government in August 2008, in Johannesburg, South Africa. It is a blueprint document, which outlines the framework of cooperation between member states within the SADC region. It came about through extensive deliberations between member states and talks on scientific and technological matters of interest within the region. Some of the aims and objectives of the Protocol are to: establish institutional mechanisms in order to strengthen regional cooperation and coordination on STI institute management and coordination structures with clearly defined functions, which will facilitate the implementation of regional STI programmes pool resources for scientific research, technological development and innovation within the region optimise public and private investment in research and development within the region and leverage external contributions recognise, develop and promote the value of indigenous knowledge systems and technologies share experiences and develop joint initiatives that promote appropriate technologies for wealth creation and elimination of poverty within communities, especially in rural areas. COMPLEXITIES, PROBLEMS AND OPPORTUNITIES Markets The varieties of markets that will need servicing by SADC payment system products are numerous, ranging from the unbanked market, needing cash remittances and basic transactional capabilities, to the formally banked consumer and corporate markets, needing more sophisticated instruments to service their requirements. While the more mature markets will undoubtedly benefit from a greater degree of regional interoperability and the economic benefits that this will bring, focus will also need to be on bringing formal transactional and basic banking options to the unbanked and under- Page 155

13 Payments interoperability in the SADC region banked, thus contributing to creating volume demand for the platform. Participants Traditionally, payment systems were the domain of central banks and their customers. Today, the world is far different with an ever-increasing number of nontraditional payments service providers entering the market. Indeed, controlled broader access by participants other than banks is often encouraged, given the desire for increased competition. The South African National Payment System Act makes provision for a number of non-traditional players including: system operators who facilitate payment infrastructure connectivity on behalf of a corporate client or even a bank that does not possess the technical skills to connect to the national payment system and would rather outsource this skill, given the cost and specialist nature of the function third-party payment service providers who collect and make payments on behalf of their clients; an example of such a service provider would be a salary payments bureau designated payment clearing participants, which provide for non-bank organisations to become designated, through the central bank, as clearing participants in their own name; the settlement function remains a bank only function. Within the SADC, these various participants, including banks and their customers, will need consideration as part of the model and are likely to play a vital role in stimulating the need for payment interoperability and growing the transaction volume throughput in the system. They will provide increased levels of competition that will, in turn, drive innovative and cost-efficient payment products and related services for the region. Cash and cheques These old payment stalwarts are not to be ignored and, while cheques in some markets are declining at a rate in excess of 20 per cent per year, there is still demand in the small and medium enterprise market. As part of the SADC s payment strategy, finding suitable electronic alternatives, again possibly with mobile complementing the solution, will see the exit of cheques becoming an option for consideration. Cash, in contrast, is likely to remain a dominant payment mechanism for many years to come and, while cash displacement strategies are likely to make some inroads, cash is unlikely to warrant an exit strategy any time soon. To this end, electronic management of country and regional cash balances and its movement is a necessity, and automated clearing houses can and do facilitate, through their systems, a central and interoperable role. Electronic payments Payment service demand stimulation through the encouragement of electronic deposits (batch and real time), such as salary credits, and strategies around cash displacement will not only contribute to the volume flowing through the payment systems, but will also have a positive impact on payment velocity and retail funding availability. Recurring electronic payments such as utility payments, insurance premiums and loan repayments can typically be serviced through a direct debit batch service that pulls the transaction from the bank account on an agreed date. Other services that have been developed in recent years include low income collection products that function through a randomised collection approach, so that one collector is Page 156

14 Gillis and Pillay not given preference over another. This product also uses card authentication technology, and it is quite conceivable that mobile and even biometric authentication could become natural replacements or alternatives to cards in certain markets. Electronic payment mechanisms such as card products are a natural complement to a bank account deposit or a credit facility. They give control and flexibility to the customer and the management of their financial activities. Interoperable card products can be expensive, however, as they are largely supplied through international companies offering features such as international interoperability, which are unlikely to be useful to a market not prone to internet use or overseas travel. Alternatives such as an interoperable domestic card scheme might prove to be a more cost-effective alternative. The use of technologies such as nearfield communication, biometrics and the role that mobile will undeniably play in the provision of payment transactions, are fundamental ingredients in stimulating the demand. It is worth reiterating that linking mobile, the technology with which even a customer with very little financial literacy is familiar, to the card environment could become the bridging catalyst to a broader market acceptance of formal financial services and products, thus increasing payment volume across the platform. Interchange One of the overarching economic factors that will need consideration is the establishment of levels of interchange that will flow between the transaction acquirers and issuers in the payment systems. Levels will need to be set so that the economics of both sides of the market are balanced, ensuring stimulation of demand for the service. New and emerging payment systems might also need a different approach to stimulate demand as opposed to the more mature and established markets that have established acceptance and demand. Interchange has been the subject of debate for many years in countries such as the USA, the European Union, Australia and even in South Africa through its Competition Commission Enquiry ( ). The central bank of South Africa is currently facilitating a process to review the local interchange dynamics with a view to establishing a methodology or approach that will enable the revision of interchange levels across its national payment system. The impact of this process on the establishment of the SADC payment system will need consideration. CONCLUSION In the context of regionalisation, the members of the SADC are striving towards creating an environment conducive to payments interoperability. Most SADC economies, from a retail perspective, are cash based, which renders the payment system very costly and inefficient. In addition, with the exception of South Africa, payment systems in the SADC are very small in scale, fragmented and lack competition, resulting in inefficiencies and high transaction costs. These are key impediments to intra-regional trade and an obstacle to achieving a single common market in the region. Regulators and governments are starting to consider ways of stimulating demand for the use of electronic payments through ensuring robust, balanced regulation that does not burden low-risk, costsensitive payment systems such as micro payments and remittances. The public sector, as large human resource employers in the region, can encourage the migration of salary credits or payments from cash and cheques to bank account deposits. The SADC has agreed to adopt the Page 157

15 Payments interoperability in the SADC region ISO message format. By adopting common standards across the region, the operational effectiveness, security and interoperability of the payment systems are enhanced. Standards for payment messages have been touted as significant enablers in innovation, global interoperability, competition, and efficiency and cost reduction. The SADC cross-border payment, clearing and settlement systems are paramount in enabling the safe and efficient circulation of money, thereby facilitating regional economic development. Sound SADC payment, clearing and settlement systems will enhance regional financial stability by providing, among other things, appropriate SADC payment system riskreduction measures. The region is striving towards: harmonised payment system legal frameworks in all jurisdictions; the availability of management information systems that allow each country s clearing and settlement position to be visible; and harmonised payment, clearing and settlement standards. Despite diversity between the different SADC countries in terms of economic factors, activity in the region picked up in 2010, following a slowdown experienced in 2008 and 2009 as a result of the global economic and financial crisis. Economic activity in the region grew by 5.4 per cent in 2010, compared with a growth of 2.3 per cent in Average per capita income in the SADC region increased by more than 12.1 per cent from US$3,082 in 2009 to US$3,456 in Further infrastructure improvements will boost southern Africa s growth by up to 3.0 percentage points per capita per year. A concerted and coordinated approach that puts the interests of the region above sovereign agendas will ensure that an efficient and cost-effective payment environment thrives and enables economic growth, financial inclusion and, ultimately, improved socioeconomic conditions for all citizens of the SADC. REFERENCES (1) <Source for quote> (2) United Nations Economic Commission for Africa, (UNECA) (2010) Assessing Regional Integration in Africa (ARIA IV): Enhancing Intra-Regional Trade, UNECA, Addis Ababa. (3) South African Reserve Bank (2011) The National Payment System Framework and Strategy, Vision 2015, South African Reserve Bank, Pretoria. (4) The World Bank (2008) Payment Systems Worldwide: A Snapshot. Outcomes of the Global Payment Systems Survey, The World Bank, Washington, DC, June. (5) GSMA (2011) Report, GSMA, London, November. (6) South African Reserve Bank, ref. 3 above. (7) Ibid. Page 158