The ECOWAS Commission has called on member states to intensify efforts toward the setting up of a regional Payment and Settlement System, as a key component of an ECOWAS Common Investment Market (ECIM) and a necessary building block for the establishment of an economic-union.
Speaking at the Central Banks Payment Systems Experts’ meeting which opened on Wednesday in Dakar, Senegal, on the establishment of the ECOWAS Payment and Settlement System (EPSS), the Commissioner for Industry and Private Sector Promotion Kalilou Traore, said the EPSS programme was one of the road map activities for the realisation of the ECOWAS single currency, and was in line with steps already taken by some Regional Economic Communities (RECs) across the African Continent.
“I believe that you are well familiar with this process, having implemented similar systems in your respective central banks, though at national levels,” the Commission quoted the Commissioner as telling the experts, adding that the goal is to “promote monetary and financial integration, facilitate intra-Community trade in goods and services and the realisation of the Community’s objective of establishing an economic union in line with Article 2(e) of the ECOWAS Revised Treaty”.
He also reminded them that Article 52 of the Revised Treaty “empowers the Committee of Governors of Central Banks of ECOWAS member states to make recommendations to the ECOWAS Council of Ministers, on the operations of the clearing system and of payments as well as other monetary issues. ”
A key requirement on each member state for the attainment of a regional economic union is “efficient and effective national payment system that is internationally acceptable and that would ultimately be interlinked within the region,” the Commissioner said in the address, read on his behalf by Mr. Peter Oluonye, the focal point and Principal Programme Officer at the Private Sector Directorate of the Commission.
“Luckily, the EPSS study revealed that with the exception of only Guinea Bissau and Liberia, all the banks in the rest 13 countries in the region are already operating on the Real Time Gross Settlement (RTGS) system, which is a critical pre-condition for the operation of the EPSS,” the Commissioner revealed, adding that the Commission is using a strategic approach in the EPSS process with the participation of all regional stakeholders including regional central banks, national inter-bank payment and settlement systems, West African Monetary Agency (WAMA) West African Bankers Association (WABA), switch operators in
the region, and with inputs from the World Bank.
He listed the expected benefits from the EPSS to include guarantee of prompt payment to the exporter – at the latest by the next day that the importer deposits the required amount at its Commercial Bank within the member state; building of trust among traders that would lead to an increase in intra-regional trade and drastic reduction in the cost of intra-regional trade transactions and remittance.
Others are leveling of the playing field by getting all commercial banks to deal directly with one another without having to go through banks outside the region; predictability in payment timing and reduced payment cycle time as compared to other international payment alternatives; lower cost and quick turn-around of EPSS payments translates into savings for the importer; and easy process for making cross-border payments at retail and wholesale levels.
The report of the ongoing meeting will be considered by a two-day WAMA experts meeting which begins on Friday that will feed into the Central Banks Governors meeting next week, all in the Senegalese capital.