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Page last updated
February 15, 2003




Electronic banking 
Unlocks the african renaissance


Sophisticated financial and banking networks - ranging from SWIFT coverage to Internet consumer banking ; seem not to fit the image of Africa. Many people, unfamiliar with the realities of the continent, still imagine primitive creaking banking systems. Moreover, they have a picture of financial institutions battling - in the same way as Africans in stereotype navigate potholes in roads - the challenges of poor telecommunications infrastructure.

These clichés, however, are no longer accurate. Today Africa seems to be emerging as just the place for new generation financial infrastructure. Pliny the Elder's words of more than 3 000 years ago - "out of Africa always something new" ; could not be a more apt description of African banking in 2001.

Internet Banking
Overall, Africa appears poised for a decade of high growth in electronic banking. All the big retail banks in South Africa have developed and implemented their own, world class internet banking systems, and smaller banks across the continent are following suit. With the growing trend amongst banks to opt for packaged solutions, Global Technology is unrolling Internet banking with success in Africa. Demand for online banking in Mocambique recently saw the country's largest bank, Banco Standard Totta d' Mocambique install the Globus internet banking solution for its customers.

While South Africa, like many Western countries, still wrestles with the challenges of copper wire theft and the costs of fibre optic cabling, many African banks are choosing satellite communication, bypassing old methods completely. Faced with serious infrastructure and telecommunications problems in West Africa, the region's largest banking group, Ecobank, has bypassed the copper wire landline option and purchased the same internet banking solution to service its customers in 11 countries across the region. The Ecobank implementation runs on a very small aperture terminal (VSAT), a cost effective alternative that reduces the banks' dependence on unreliable landlines

Central clearing & switching
In Global's experience over many years of doing business on the continent, Africa has shown a great willingness to leapfrog old banking technologies and eagerly adopt the new ones. And often this leapfrog is a huge one. Consider for example, that there was a time quite recently where settlement between banks was done by groups of messengers who traveled to a central meeting place, like a park, on their bicycles or motorbikes, with cheques and settle up every day. South Africa, which has the continent's most sophisticated banking system, addressed the daily settlement problem years ago with the introduction of electronic clearing.

More recently, the Central Bank of Swaziland has contracted Global Technology to install an SFI Bulk Clearing Switch to automate clearing and settlement processes for the new Swaziland Automated Electronic Clearing House. This system means that Swaziland's settlement and clearing processes will be fully automated while the risks of error and fraud are reduced. The system, set to go live in October this year, reduces human intervention in the clearing and settlement process, speeds up processes and eliminates errors. The end-result is that the entire clearing cycle between banks is shortened from the current situation of seven days to a few minutes. Thus, the ancient kingdom of Swaziland is converting from a physical, manual, paper-based settlement environment to a virtual, seamless, paperless one.

Today, African bankers are consistently highly selective and discerning buyers of IT software, services and infrastructure. In the past, Africa was often short-changed by buying into dated technology that frequently came without adequate local support. Presently, IT customers in banking want to know that the technology works, and works for them; and they demand reliability and guaranteed support services.

The Society for World-wide Financial Telecommunications
In the past five years, SWIFT has become a continent-wide network in Africa. The growth of SWIFT in Africa may well be the major factor, say banking pundits in Africa, that kick-starts and provides the secure electronic financial environment the long awaited African Renaissance needs.

The Society for Worldwide Interbank Financial Telecommunications' co-operative network, covering 193 countries worldwide, came first to South Africa in 1982, and since 1996 has spread rapidly across the entire continent. It now spans almost all of Africa.

Currently, there are more than 800 banks in Africa. Global Technology provides systems, software and services to more than 200 of these institutions. Two of our business units are closely involved and instrumental as SWIFT business partners in rolling out SWIFT across the continent.

This year the Johannesburg Stock Exchange, which is in the process of scrip dematerialisation, purchased SWIFT Alliance Access for its securities depository and electronic settlement system, STRATE (Share Transactions Totally Electronic). Going live with SWIFT clearly has far-reaching consequences for South Africa as a global market player. South Africa ranks as the 20th largest user of SWIFT internationally. Once transaction volume of STRATE reaches the expected 260 000 messages a day, it is estimated that South Africa will move up into 6th position.

Other players, like the South African Reserve Bank and the Standard Corporate Merchant Bank are currently prototype testing sites for SWIFTnet. These two South African institutions are amongst four test sites worldwide for SWIFTnet, SWIFT's new generation solution. SWIFTnet facilitates front-end dealing and trading as well as back-end processing and settlements online in an interactive and real-time environment.

The growth of SWIFT in Africa is not confined to sophisticated and large banks; small banks and financial institutions are also starting to enjoy the benefits of financial connectivity. One year into the millennium, our SWIFT Africa Bureau; to which we have recently welcomed the IMF as an equity partner; working in partnership with continental bodies such as COMESA (Common Market for Eastern and Southern Africa) has developed a shared-cost model to provide the full SWIFT service - at affordable prices - to smaller players too. The Bureau's mission is to level the playing fields and fulfill a practical role in ensuring that Africa's willingness to grow socio-economically has a secure and efficient financial backbone. A small bank in Africa now can have the same SWIFT service enjoyed daily by Lloyds, or any other first world institution.

This year, the Bureau has signed up banks in Botswana and Kenya, and institutions in Tanzania, Uganda and Mocambique are likely to follow suit

Interestingly, the SWIFT Africa Bureau connects its customers to the SWIFT network by utilising the existing SITA communication hubs at international airports, bypassing the obstacles presented by unreliable telecom infrastructure. SITA jointly owns and operates the world's largest private international data and voice communications network which reaches 220 countries and this partnership contributes to providing resilience and reducing costs for bureau customers.

This initiative was set up following extensive work by the COMESA Clearing House, with Global Technology as its strategic business technology partner. COMESA members benefit from reduction in costs; improved automation and management of risks; provision of a secure and reliable telecommunications system; enabling increased electronic cross border, cross sectoral trade. This will contribute toward creating a positive environment for foreign investment and trade as well as providing a highway for the region's payment system to reduce settlement periods. The macro-economic and social benefits of this initiative in generating unprecedented economic growth for the African continent are significant. Indeed, preliminary estimates show, for example, that the liberalisation of financial markets and the establishment of a Free Trade Area could mean that trade within COMESA will rise from $US4.2billion (in 1998) to approximately US$9billion by 2005.

Electronic financial telecommunications will contribute to changing, positively, the economic factors and financial infrastructure of the continent. The ability to settle cross border via straight-through processing is important for Africa. For example, many countries in Africa have long settled their cross border trade, once a quarter, at banks located in London or New York. The implications for trade, and the savings in time and money made possible with immediate, error-free cross border settlement are very significant.

SWIFT removes not only spatial and geographical barriers, but also removes many of the communication problems caused by language differences between trading partners. The challenges of multi-lingualism are real in Africa in, both in internal and international trade. For instance, South Africa has 11 official languages (and more than this in total) while Nigeria speaks about 60 languages. SWIFT's unambiguous messaging system eliminates misunderstandings in interbank financial communications

Innovative bankers over the years; such as merchant banker Nathan Rothschild who sent carrier pigeons bearing information to the bond markets; would surely be impressed with the innovation and defiance of spatial and geographical boundaries displayed by African banking in the new millennium.


Ray Leonard
Chief Executive Officer
Global Technology Limited



Africa Giant
Developing continent
Electronic banking




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