Development of West African Monetary Institute Payment System

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OUTLINE
1.
Background
2.
WAMZ Payments System Development
3.
WAMZ Payment and Settlement System in The Gambia,
Guinea, Liberia and Sierra Leone (Achievements)
4.
Pan-African Payment and Settlement Platform
5.
Unique Bank Identity (UBI)
6.
Challenges
7.
Prospects
8.
Conclusion
2
BACKGROUND
3
Background
The WAMZ was established in 2000
and it comprises: The Gambia,
Ghana, Guinea, Liberia Nigeria and
Sierra Leone
The goal of the WAMZ was to
implement activities including
development of a zonal payment and
settlement system for cross border
transactions, among other activities
leading to the establishment of a
common central bank and
introduction of a single currency
4
Background (Cont.)
In 2005, the goal of the WAMZ was broaden to include economic
integration;
The Abuja Action Plan of 2009 approved a roadmap for the WAMZ Single
Currency Project incorporating new structural benchmarks to facilitate
WAMZ monetary integration process, culminating in to formulation of five
strategic pillars to guide the WAMZ integration process
5
Background (Cont.)
The strategic pillars are:
Pillar I: Macroeconomic convergence, research and statistics
Pillar II: Trade and regional  integration
Pillar III: Financial integration
Pillar IV: Payment system infrastructure
Pillar V: Institutional and capacity building
6
Background (Cont.)
The Authority of Heads of State and Government of ECOWAS in 2014
adopted a Single-Track Approach to monetary union in West Africa and
proposed the launch of a single currency by 2020
In view of this, the Institute is now responsible for managing and
coordinating monetary integration activities within the WAMZ to enhance
its effectiveness and serve as a platform for building consensus on and
promoting economic integration, while ECOWAS Commission leads
monetary integration process of the region
7
WAMZ
PAYMENTS SYSTEM
DEVELOPMENT
8
The main objective of the payments system development in the
West African Monetary Zone (WAMZ) as part of the economic and
monetary integration programme of zone has been the fulfillment of
the following primary objectives:
Eliminate, as far as possible, risks from payments, clearing and
settlement systems.
Speed up the exchange and settlement of funds and securities to
levels that will effectively eliminate float.
Improve convenience, service and security for users. The general
trend is to migrate from cash and paper-based payment instruments
to a state of high usage of electronic modes of payment.
9
OBJECTIVES
Bring efficiency to government receipts and payments and
leverage them for the financial deepening of the economies of
the WAMZ member countries.
Improve the WAMZ National Central Banks’ (NCBs) monetary
management capabilities by reducing float and supplying timely
accurate information on the flow of funds.
Assess the legal framework that will support the modernization
of payments system within the WAMZ member countries.
Draw up criteria to integrate and attain harmonized
interoperability to facilitate cross border payments.
10
OBJECTIVES…
11
WAMZ PAYMENTS SYSTEM DEVELOPMENT
PROJECT IN THE GAMBIA, GUINEA,
LIBERIA AND SIERRA LEONE-
ACHIEVEMENTS
The implementation of the WAMZ Payments System
Development Project in The Gambia, Guinea, Liberia and Sierra
Leone funded by the African Development Bank (AfDB) was
successfully completed in 2016.
The primary objective of the Project is to develop and automate
the payment system infrastructure of the four countries to the
level already attained by Ghana and Nigeria.
12
Introduction
Structure of the Project
The  components implemented under the Project in the four countries are:
Real Time Gross Settlement (RTGS) system
 Scriptless Securities Settlement (SSS) System
Automated Clearing House System
 Automated Cheque Processing System
Core Banking Application (CBA) for the Central Banks
Besides the payment system components, the Project included
infrastructural upgrade in the form of Local Area Network (LAN)
reconfiguration, Metropolitan Area Network (MAN) plus Internet and
Information Technology (IT) Room Security and Energy.
13
Preference for electronic payments
The zone had witnessed a gradual
shift from the dominance of cash
and cheques to the preference for
electronic payments and
settlement in electronic products
like ATM, POS, mobile money etc.
14
Cheque Clearing Time Reduced
The volume of cheques cleared
have declined over the years,
suggesting increased usage of
electronic payments system
15
Increased Digital Transactions
The wave of digital transactions is gradually spreading across the zone as
more innovative channels continue to be developed by FinTechs in
response to the opportunity offered by the success so far recorded in the
WAMZ Payments System Development Project.
16
Enhanced Financial Inclusion
The upgrade of the payment system infrastructure facilitated the
successful launch of mobile money services in The Gambia and Liberia
thereby boosting financial inclusion
17
Increased Usage of Cheques
In Guinea, the increase in the
volume of cleared cheques was
on account of confidence in
the payment system
infrastructure as transactions
are settled through cheques
rather than cash.
18
Increased Usage of ATM and PoS
In Liberia, the number of
transactions using ATM and
POS is on a consistent
increase.
The National Electronic Payment
Switch (NEPS) promoted by the
CBL has gone live
 respectively.
19
Infrastructure Upgrade
In Sierra Leone, the payment system infrastructure set the stage for the
smooth implementation of electronic payment platforms such as ATM, POS
and mobile money services.
20
Outcome
The Project was successfully completed in 2016 and functioning
efficiently in all  the beneficiary Member States.
The completion of the project paved the way for the ongoing
interlinking of the Member States’ RTGS for cross-border
transactions in local currencies through the Afreximbank’s Pan
African Payment and Settlement Plarform (PAPSP).
21
4.0
 
PAN AFRICA PAYMENT AND SETTLEMENT PLATFORM (PAPSP)
WAMI, in consultation with the Central Banks of the Member States of the
WAMZ, and in partnership with Afreximbank, have taken giant strides to
pilot the Afreximbank led Pan African Payments and Settlement Platform
(PAPSP) in the WAMZ countries.
 The PAPSP is designed to create a payment and settlement platform with
Afreximbank as clearing and settlement agent with the participating CBs as
co-Clearing and Settlement agents
It is to provide an alternative to the current high-cost and lengthy
correspondent banking relationships in facilitating trade and other
economic activities among African countries, through a simple, low cost
and risk-controlled payment, clearing and settlement system.
The PAPSP is aimed at facilitating intra-African trade and formalizing some
of the unrecorded trade due to the prevalence of informal cross-border
trade in Africa.
22
PAPSP is a central financial infrastructure for the economic and financial
integration of Africa.
PAPSP is a centralized payment and settlement infrastructure for intra-African
payments only.
PAPSP will operate independently of domestic payment systems
PAPSP payments will be in local currency and settlement will be on
multilateral netting system, with bilateral netting as option.
PAPSP defines a common framework for transacting, clearing and settling
cross-border transactions, including operating rules, business practices and
standards, participation requirements and funding schemes, among others
PAPSP will operate largely on pre-funding basis.
The PAPSP is expected to be test run in the second quarter of 2019.
23
4.0
 
PAN AFRICA PAYMENT AND SETTLEMENT PLATFORM
(PAPSP)…
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Unique Identity, especially digital identity serves as a foundation to
transform governance and enhance service delivery in the areas of
healthcare, agriculture, voting, transportation, financial inclusion, access to
basic services and welfare programmes. 
As directed by the convergence council of the WAMZ in The Gambia,
WAMI seeks to implement a UBI number similar to the BVN in Nigeria in
2014.
24
5.0
 
UNIQUE BANK IDENTITY
5.0
 
UNIQUE BANK IDENTITY…
    
OBJECTIVES AND PROJECT RATIONALE
The major objectives of the initiative are to 
protect bank customers, reduce fraud and strengthen the financial system
help the banking system in profiling creditors and hence reduce the rate of
loan defaults
reduce illegal banking transactions and improve national intelligent gathering
system
enhance access to consumer credits leading to a virile economy where
purchasing power increases and that lead to increased productivity
On the fiscal side, UBI will assist the governments in eliminating ghost
workers in the government payrolls 
project would also assist Member States to realize a single identity scheme
within the Zone. 
Hence, the harmonization of national identity scheme in the zone 
25
 At completion, the UBI will offer the following specific
benefits:
provide a uniform industrially accepted unique identity for
Bank Customers
authentication of transactions using only biometric
features and UBI
Identification of blacklisted customers
Uniform credit check
26
EXPECTED BENEFITS
EXPECTED BENEFITS
Benefits to Customers
Customers’ Bank Accounts are protected from unauthorized access
It will address issues of identity theft, thus reduce exposure to fraud
Easier access to Banking services (e.g. enhanced credit advancement)
It will increase the speed of service as transactions will be
authenticated using only biometric features and UBI
27
EXPECTED BENEFITS
Benefits to the Banks and other Financial Institutions
UBI gives a unique identity that can be verified across the banking
industry (not peculiar to one Bank)
The UBI will enhance the banking industry chances of being able to
fish out blacklisted customers
Ease of Use
Improved KYC
Increased confidence of customers in the Banking industry, which
would improve the financial standing of banks
Accountability/Traceability
28
EXPECTED BENEFITS
Benefits to the Country
Accountability/Traceability
Greater Financial Inclusion
It would promote a safe and sound financial system
Access to consumer credits leading to a virile economy where
purchasing power of indigenes increase and this leads to increased
productivity and consequently GDP.
Benefits to zone
Enhance financial inclusion
Increase confidence in the zonal financial institutions
Support financial integration.
29
5.0
 
UNIQUE BANK IDENTITY…
The estimated cost of implementing the Unique Bank Identity scheme in the WAMZ
is presented as follows:
30
The total cost stood at 
US$16,010.199
WAMI will seek funding from development partners for the implementation of
the UBI. An alternative source of funding is Member States’ contribution.
CHALLENGES
31
Skills Constraints
The need to garner and maintain skilled staff cannot be overemphasised.
There is a need to improve the skills of staffs in IT and payment system to
be able to adequately meet the ever-changing technology in payments
32
Cyber Insecurity
There is the issue of cyber security as the cyberspace becomes
increasingly susceptible and prone to hackers. These and other issues like
identity management are key challenges in the payment system
development in the WAMZ.
33
PROSPECTS
34
Financial Inclusion
There is potential for greater financial inclusion, job creation and
ultimately economic development
35
Quoting and Trading in WAMZ National Currencies
Quoting and trading in WAMZ national currencies using the integrated
payment system platform could be enhanced with the backing of the
monetary authorities
36
Boost in Intra-WAMZ trade
With the low level of intra-WAMZ
trade relative to the rest of the
world estimated at 1.1 percent
in2017, this initiative is expected to
improve trade in the Zone.
Intra-WAMZ trade could be
boosted due to efficient payments
system
37
Increased Economic Growth
Digital payments would lead to greater economic growth, growth in
international e-commerce and aid in social and financial inclusion
38
Boost to Tax Administration
Digital payments have enhanced efficiency in tax administration by
minimising human contact and accurate capturing of tax transaction
details
39
Indirect Formalization of the Informal Sector
Digital payment platforms present opportunity to indirectly formalise the
informal sector by enhancing the ease of meeting tax obligations
40
Lower risks
Virtually all payments by economic agents within the WAMZ would be
done electronically eliminating the risks associated with carrying cash;
41
Enhanced Financial Supervision
The adoption of a harmonized legal and regulatory framework would form
the basis to supervise the activities of FinTechs to ensure that participants
in e-commerce are protected and that innovations in payments do not
affect financial stability in the zone.
42
CONCLUSION
43
Following the successful implementation of a modernised national payments system, the
next stage is the development of an integrated regional wholesale and retail payment and
settlement systems that will strengthen the efficiency of cross-border funds transfers
within the six WAMZ countries; as well as strengthening of the financial sector regulatory
and oversight framework.
The Afreximbank-led Pan-African payment and settlement platform, using WAMZ as pilot,
is expected to go-live in the second quarter of 2019, and would thereafter be rollover to
the rest of Africa
The wave of paperless transactions is gradually spreading in the WAMZ as more and more
innovative channels continue to be developed by FinTechs in response to the quest to
bring onboard the unbanked into the formal banking sector without resulting to the
cumbersome processes characterized by the traditional methods.
44
This wave of change has necessitated equally robust innovative approach to financial
inclusion by creating payment platforms that bring the informal sector under the
supervision of regulatory authorities.
The WAMZ Payments System Development Project has led to effective and efficient
payment systems in The Gambia, Guinea, Liberia and Sierra Leone.
 Additionally, new payment products have successfully been introduced in the beneficiary
countries due to the upgrade of their payments system infrastructure, giving way to
increased participation by the public.
 The introduction of mobile money has created a platform for access to financial services
to the non-banking sector.
 This evolution will further be boosted by the collaboration by WAMI and Afreximbank on
the Pan-Africa Payment and Settlement Platform.
45
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The West African Monetary Institute (WAMI) has been instrumental in establishing a payment and settlement system within the West African Monetary Zone (WAMZ). The institute's efforts have focused on promoting cross-border transactions and economic integration among member countries, with the ultimate goal of introducing a single currency. Through strategic pillars such as macroeconomic convergence, trade integration, and institutional capacity building, WAMI is driving the regional monetary integration process.


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  1. WEST AFRICAN MONETARY INSTITUTE WEST AFRICAN MONETARY INSTITUTE PAYMENT PAYMENT SYSTEM SYSTEM EXPERIENCE IN EXPERIENCE IN THE WEST AFRICAN MONETARY MONETARY ZONE (WAMZ) ZONE (WAMZ) THE WEST AFRICAN BEING PRESENTED AT BEING PRESENTED AT ASSOCIATION OF AFRICAN CENTRAL BANKS (AACB) ASSOCIATION OF AFRICAN CENTRAL BANKS (AACB) WORKSHOP ON PAYMENTS SYSTEM WORKSHOP ON PAYMENTS SYSTEM CAIRO, EGYPT CAIRO, EGYPT APRIL 18 APRIL 18 - -20, BY BY NGOZI E. EGBUNA (Ph.D.) NGOZI E. EGBUNA (Ph.D.) GENERAL, WEST AFRICAN MONETARY INSTITUTE 20, 2019 2019 DIRECTOR DIRECTOR- -GENERAL, WEST AFRICAN MONETARY INSTITUTE

  2. OUTLINE 1. Background 2. WAMZ Payments System Development 3. WAMZ Payment and Settlement System in The Gambia, Guinea, Liberia and Sierra Leone (Achievements) 4. Pan-African Payment and Settlement Platform 5. Unique Bank Identity (UBI) 6. Challenges 7. Prospects 8. Conclusion 2

  3. BACKGROUND 3

  4. Background The WAMZ was established in 2000 and it comprises: The Gambia, Ghana, Guinea, Liberia Nigeria and Sierra Leone The goal of the WAMZ was to implement activities development of a zonal payment and settlement system for cross border transactions, among other activities leading to the establishment of a common central introduction of a single currency including bank and 4

  5. Background (Cont.) In 2005, the goal of the WAMZ was broaden to include economic integration; The Abuja Action Plan of 2009 approved a roadmap for the WAMZ Single Currency Project incorporating new structural benchmarks to facilitate WAMZ monetary integration process, culminating in to formulation of five strategic pillars to guide the WAMZ integration process 5

  6. Background (Cont.) The strategic pillars are: Pillar I: Macroeconomic convergence, research and statistics Pillar II: Trade and regional integration Pillar III: Financial integration Pillar IV: Payment system infrastructure Pillar V: Institutional and capacity building 6

  7. Background (Cont.) The Authority of Heads of State and Government of ECOWAS in 2014 adopted a Single-Track Approach to monetary union in West Africa and proposed the launch of a single currency by 2020 In view of this, the Institute is now responsible for managing and coordinating monetary integration activities within the WAMZ to enhance its effectiveness and serve as a platform for building consensus on and promoting economic integration, while ECOWAS Commission leads monetary integration process of the region 7

  8. WAMZ PAYMENTS SYSTEM DEVELOPMENT 8

  9. OBJECTIVES The main objective of the payments system development in the West African Monetary Zone (WAMZ) as part of the economic and monetary integration programme of zone has been the fulfillment of the following primary objectives: Eliminate, as far as possible, risks from payments, clearing and settlement systems. Speed up the exchange and settlement of funds and securities to levels that will effectively eliminate float. Improve convenience, service and security for users. The general trend is to migrate from cash and paper-based payment instruments to a state of high usage of electronic modes of payment. 9

  10. OBJECTIVES Bring efficiency to government receipts and payments and leverage them for the financial deepening of the economies of the WAMZ member countries. Improve the WAMZ National Central Banks (NCBs) monetary management capabilities by reducing float and supplying timely accurate information on the flow of funds. Assess the legal framework that will support the modernization of payments system within the WAMZ member countries. Draw up criteria to integrate and attain harmonized interoperability to facilitate cross border payments. 10

  11. WAMZ PAYMENTS SYSTEM DEVELOPMENT PROJECT IN THE GAMBIA, GUINEA, LIBERIA AND SIERRA LEONE- ACHIEVEMENTS 11

  12. Introduction The Development Project in The Gambia, Guinea, Liberia and Sierra Leone funded by the African Development Bank (AfDB) was successfully completed in 2016. The primary objective of the Project is to develop and automate the payment system infrastructure of the four countries to the level already attained by Ghana and Nigeria. implementation of the WAMZ Payments System 12

  13. Structure of the Project The components implemented under the Project in the four countries are: Real Time Gross Settlement (RTGS) system Scriptless Securities Settlement (SSS) System Automated Clearing House System Automated Cheque Processing System Core Banking Application (CBA) for the Central Banks Besides the payment system components, the Project included infrastructural upgrade in the form of Local Area Network (LAN) reconfiguration, Metropolitan Area Network (MAN) plus Internet and Information Technology (IT) Room Security and Energy. 13

  14. Preference for electronic payments The zone had witnessed a gradual shift from the dominance of cash and cheques to the preference for electronic payments settlement in electronic products like ATM, POS, mobile money etc. Fig B: ATM Transaction 90,000 80,000 and 70,000 60,000 50,000 Volume 40,000 30,000 20,000 10,000 0 2015 2016 2017 2018 14

  15. Cheque Clearing Time Reduced The volume of cheques cleared have declined over the years, suggesting increased usage of electronic payments system Gambia Gambia 200 179.5 180 171.2 155.8 160 Volume of Cheques cleared 000 140.3 140 120 100 80 60 40 20 0 2015 2016 2017 2018 15

  16. Increased Digital Transactions The wave of digital transactions is gradually spreading across the zone as more innovative channels continue to be developed by FinTechs in response to the opportunity offered by the success so far recorded in the WAMZ Payments System Development Project. 16

  17. Enhanced Financial Inclusion The upgrade of the payment system infrastructure facilitated the successful launch of mobile money services in The Gambia and Liberia thereby boosting financial inclusion 17

  18. Increased Usage of Cheques In Guinea, the increase in the volume of cleared cheques was on account of confidence in the payment infrastructure as transactions are settled through cheques rather than cash. Fig D: Cleared Cheques 400,000 350,000 system 300,000 250,000 volume 200,000 150,000 100,000 50,000 0 2015 2016 2017 2018 18

  19. Increased Usage of ATM and PoS Fig E: Volume of transaction In Liberia, the number of transactions using ATM and POS is on a consistent increase. The National Electronic Payment Switch (NEPS) promoted by the CBL has gone live respectively. 1,200,000 1,000,000 800,000 Volume 600,000 400,000 200,000 0 Cheques ATM 2014 POS 2013 19

  20. Infrastructure Upgrade In Sierra Leone, the payment system infrastructure set the stage for the smooth implementation of electronic payment platforms such as ATM, POS and mobile money services. Volume of POS transactions Volume of ATM Transactions 1,000,000.00 35,000.00 900,000.00 30,000.00 800,000.00 700,000.00 25,000.00 600,000.00 20,000.00 500,000.00 400,000.00 15,000.00 300,000.00 10,000.00 200,000.00 5,000.00 100,000.00 0.00 0.00 2013 2014 2015 2016 2017 20 2013 2014 2015 2016 2017

  21. Outcome The Project was successfully completed in 2016 and functioning efficiently in all the beneficiary Member States. The completion of the project paved the way for the ongoing interlinking of the Member States RTGS for cross-border transactions in local currencies through the Afreximbank s Pan African Payment and Settlement Plarform (PAPSP). 21

  22. 4.0 WAMI, in consultation with the Central Banks of the Member States of the WAMZ, and in partnership with Afreximbank, have taken giant strides to pilot the Afreximbank led Pan African Payments and Settlement Platform (PAPSP) in the WAMZ countries. The PAPSP is designed to create a payment and settlement platform with Afreximbank as clearing and settlement agent with the participating CBs as co-Clearing and Settlement agents It is to provide an alternative to the current high-cost and lengthy correspondent banking relationships in facilitating trade and other economic activities among African countries, through a simple, low cost and risk-controlled payment, clearing and settlement system. The PAPSP is aimed at facilitating intra-African trade and formalizing some of the unrecorded trade due to the prevalence of informal cross-border trade in Africa. PAN AFRICA PAYMENT AND SETTLEMENT PLATFORM (PAPSP) 22

  23. 4.0 (PAPSP) PAN AFRICA PAYMENT AND SETTLEMENT PLATFORM HIGHLIGHTS OF THE PAPSP HIGHLIGHTS OF THE PAPSP PAPSP is a central financial infrastructure for the economic and financial integration of Africa. PAPSP is a centralized payment and settlement infrastructure for intra-African payments only. PAPSP will operate independently of domestic payment systems PAPSP payments will be in local currency and settlement will be on multilateral netting system, with bilateral netting as option. PAPSP defines a common framework for transacting, clearing and settling cross-border transactions, including operating rules, business practices and standards, participation requirements and funding schemes, among others PAPSP will operate largely on pre-funding basis. The PAPSP is expected to be test run in the second quarter of 2019. 23

  24. 5.0 UNIQUE BANK IDENTITY Unique Identity, especially digital identity serves as a foundation to transform governance and enhance service delivery in the areas of healthcare, agriculture, voting, transportation, financial inclusion, access to basic services and welfare programmes. As directed by the convergence council of the WAMZ in The Gambia, WAMI seeks to implement a UBI number similar to the BVN in Nigeria in 2014. 24

  25. 5.0 The major objectives of the initiative are to protect bank customers, reduce fraud and strengthen the financial system help the banking system in profiling creditors and hence reduce the rate of loan defaults reduce illegal banking transactions and improve national intelligent gathering system enhance access to consumer credits leading to a virile economy where purchasing power increases and that lead to increased productivity On the fiscal side, UBI will assist the governments in eliminating ghost workers in the government payrolls project would also assist Member States to realize a single identity scheme within the Zone. Hence, the harmonization of national identity scheme in the zone UNIQUE BANK IDENTITY OBJECTIVES AND PROJECT RATIONALE 25

  26. EXPECTED BENEFITS At completion, the UBI will offer the following specific benefits: provide a uniform industrially accepted unique identity for Bank Customers authentication of transactions using only biometric features and UBI Identification of blacklisted customers Uniform credit check 26

  27. EXPECTED BENEFITS Benefits to Customers Customers Bank Accounts are protected from unauthorized access It will address issues of identity theft, thus reduce exposure to fraud Easier access to Banking services (e.g. enhanced credit advancement) It will increase the speed of service as transactions will be authenticated using only biometric features and UBI 27

  28. EXPECTED BENEFITS Benefits to the Banks and other Financial Institutions UBI gives a unique identity that can be verified across the banking industry (not peculiar to one Bank) The UBI will enhance the banking industry chances of being able to fish out blacklisted customers Ease of Use Improved KYC Increased confidence of customers in the Banking industry, which would improve the financial standing of banks Accountability/Traceability 28

  29. EXPECTED BENEFITS Benefits to the Country Accountability/Traceability Greater Financial Inclusion It would promote a safe and sound financial system Access to consumer credits leading to a virile economy where purchasing power of indigenes increase and this leads to increased productivity and consequently GDP. Benefits to zone Enhance financial inclusion Increase confidence in the zonal financial institutions Support financial integration. 29

  30. 5.0 The estimated cost of implementing the Unique Bank Identity scheme in the WAMZ is presented as follows: UNIQUE BANK IDENTITY UNIQUE BANK IDENTIFICATION PROJECT COST ESTIMATES PER COUNTRY COMPONENT I: UBI COMPONENT II COMPONENT III NCBs Participants HQ Bank Branches Harmonization Capacity Building Project Mang't Total Per Country 44,880 286,578 80,000 112,200 4,298,670 80,000 63,580 576,450 80,000 33,660 279,990 80,000 52,360 359,046 80,000 Gambia Ghana Guinea Liberia Sierra Leone 1,720,557 1,720,557 1,720,557 1,720,557 1,720,557 120,000 120,000 120,000 120,000 120,000 60,000 60,000 60,000 60,000 60,000 2,312,015 6,391,427 2,620,587 2,294,207 2,391,963 Total 8,602,785 306,680 5,800,734 400,000 600,000 300,000 16,010,199 The total cost stood at US$16,010.199 WAMI will seek funding from development partners for the implementation of the UBI. An alternative source of funding is Member States contribution. 30

  31. CHALLENGES 31

  32. Skills Constraints The need to garner and maintain skilled staff cannot be overemphasised. There is a need to improve the skills of staffs in IT and payment system to be able to adequately meet the ever-changing technology in payments 32

  33. Cyber Insecurity There is the issue of cyber security as the cyberspace becomes increasingly susceptible and prone to hackers. These and other issues like identity management are key challenges in the payment system development in the WAMZ. 33

  34. PROSPECTS 34

  35. Financial Inclusion There is potential for greater financial inclusion, job creation and ultimately economic development 35

  36. Quoting and Trading in WAMZ National Currencies Quoting and trading in WAMZ national currencies using the integrated payment system platform could be enhanced with the backing of the monetary authorities 36

  37. Boost in Intra-WAMZ trade With the low level of intra-WAMZ trade relative to the rest of the world estimated at 1.1 percent in2017, this initiative is expected to improve trade in the Zone. Intra-WAMZ trade boosted due to efficient payments system Intra Intra- -WAMZ Trade Relative to the Rest WAMZ Trade Relative to the Rest of the World of the World 3 2.5 could be 2 Percent 1.5 1 0.5 0 2013 2014 2015 2016 2017 37

  38. Increased Economic Growth Digital payments would lead to greater economic growth, growth in international e-commerce and aid in social and financial inclusion 38

  39. Boost to Tax Administration Digital payments have enhanced efficiency in tax administration by minimising human contact and accurate capturing of tax transaction details 39

  40. Indirect Formalization of the Informal Sector Digital payment platforms present opportunity to indirectly formalise the informal sector by enhancing the ease of meeting tax obligations 40

  41. Lower risks Virtually all payments by economic agents within the WAMZ would be done electronically eliminating the risks associated with carrying cash; 41

  42. Enhanced Financial Supervision The adoption of a harmonized legal and regulatory framework would form the basis to supervise the activities of FinTechs to ensure that participants in e-commerce are protected and that innovations in payments do not affect financial stability in the zone. 42

  43. CONCLUSION 43

  44. Following the successful implementation of a modernised national payments system, the next stage is the development of an integrated regional wholesale and retail payment and settlement systems that will strengthen the efficiency of cross-border funds transfers within the six WAMZ countries; as well as strengthening of the financial sector regulatory and oversight framework. The Afreximbank-led Pan-African payment and settlement platform, using WAMZ as pilot, is expected to go-live in the second quarter of 2019, and would thereafter be rollover to the rest of Africa The wave of paperless transactions is gradually spreading in the WAMZ as more and more innovative channels continue to be developed by FinTechs in response to the quest to bring onboard the unbanked into the formal banking sector without resulting to the cumbersome processes characterized by the traditional methods. 44

  45. This wave of change has necessitated equally robust innovative approach to financial inclusion by creating payment platforms that bring the informal sector under the supervision of regulatory authorities. The WAMZ Payments System Development Project has led to effective and efficient payment systems in The Gambia, Guinea, Liberia and Sierra Leone. Additionally, new payment products have successfully been introduced in the beneficiary countries due to the upgrade of their payments system infrastructure, giving way to increased participation by the public. The introduction of mobile money has created a platform for access to financial services to the non-banking sector. This evolution will further be boosted by the collaboration by WAMI and Afreximbank on the Pan-Africa Payment and Settlement Platform. 45

  46. THANK YOU 46

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