ECOWAS commission wants integrated payment system

The Economic Community of West African States Commission has called on member states to intensify efforts toward the setting up of a regional payment and settlement system.

This, the body said, would serve as a key component of an ECOWAS common investment market and a necessary building block for the establishment of an economic-union.

A statement by the body quoted the Commissioner for Industry and Private Sector Promotion, ECOWAS, Mr. Kalilou Traore, as saying this to ‘Central Banks Payment Systems Experts’ meeting In Dakar, Senegal.

Traore said the ECOWAS Payment and Settlement System programme was one of the roadmap activities for the realisation of ECOWAS single currency, and was in tandem with steps already taken by some regional economic communities across the continent.

He said, “I believe that you are well familiar with this process, having implemented similar systems in your respective central banks, though at national levels,” the Commissioner told 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.”

The address, read on his behalf by the Principal Programme Officer at the Private Sector Directorate of the commission, Mr. Peter Oluonye, said a key requirement from each member state for the attainment of a regional economic union is “efficient and effective national payment system that is internationally acceptable and that will ultimately be interlinked within the region.”

Traore said, “Luckily, the EPSS study revealed that with 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 system, which is a critical pre-condition for the operation of the EPSS.”

He added that the commission was using a strategic approach in the EPSS process with the participation of all regional stakeholders, including regional central banks, national interbank payment and settlement systems, West African Monetary Agency, West African Bankers Association, 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; 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 levelling 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 turnaround of EPSS payments translate into savings for the importer; and easy process for making cross-border payments at retail and wholesale levels.

Given the “importance attached to EPSS in our economic integration,” Traore urged the experts to thoroughly examine the submissions by project consultants and make recommendations to the forthcoming Committee of Central Bank Governors Meeting.

“With EPSS, the need for correspondent banking to facilitate trade transactions between ECOWAS member states will soon be unnecessary, ” he affirmed.

The report of the ongoing meeting will be considered by WAMA experts.