Data from Society for Worldwide Interbank Financial Telecommunication (SWIFT) shows that Africa’s traffic growth has outperformed its total growth globally. In the year to date, total message traffic volumes grew by 12.8% versus 5.4% growth for SWIFT worldwide, illustrating that Africa plays an increasingly important role in SWIFT’s global business.
Levels of growth were also significantly higher than in Europe, Middle East and Africa (EMEA) at 3.2% and the Americas at 6.7%, and closely behind Asia Pacific at 15%.
This growth is underpinned by a significant increase in securities and treasury traffic; securities rose by 15.6% while treasury traffic increased by 23.7%. Growth was even more pronounced in the South Africa Development Community (SADC), with securities traffic up by 16.6% and treasury by 56.1%.
The payment segment has also witnessed a strong rise in volumes, a reflection that many countries in Africa continue to see good economic growth despite a more challenging global environment. African payment traffic volumes grew by 11.6% versus 4.6% growth for SWIFT worldwide. Africa remains the fastest growing region for payments traffic, ahead of the Americas at 5.4%, EMEA at 4.4% and Asia Pacific at 4.3%.
The growth figures are the latest data showing a long-term growth trajectory for Africa. The payments business has grown 89% since 2011, significantly higher than total SWIFT payments growth of 50%. Compound annual growth for Africa since 1999 has been 16.1% year on year.
Hugo Smit, Head of Sub-Sahara Africa, SWIFT said: “Africa is an extremely important market for SWIFT. Even in the face of global economic challenges, the continent continues to outperform other regions and SWIFT’s global growth. We expect this trend to continue as African countries diversify their economies. SWIFT will continue to invest in its African business to support the local financial community.”
Sido Bestani, Head of Middle East, Turkey & Africa, SWIFT, highlighted the value of SWIFT data in the story it tells about African economies. “Through the development of the SWIFT index*, we know that SWIFT data is closely correlated to economic activity. Rising SWIFT traffic volumes are therefore an indicator of economic growth. The data released today indicates strong but also long-term and sustainable economic growth across Africa.”
SWIFT held its 23rd African Regional Conference (ARC) last month from 17-19 in Balaclava, Mauritius. The event brought together over 400 policy makers, industry leaders and the broader financial community from across the African continent to discuss the most significant challenges and opportunities facing the continent. Discussions focussed on Megatrends, financial inclusion, the impact of financial crime compliance, the future of payments and the evolution of Africa’s capital markets.
For the second year, ARC partnered with Innotribe, SWIFT’s financial technology innovation initiative, to bring Innotribe’s Fintech Startup Challenge to Africa. It will showcase the continent’s future entrepreneurs and give delegates the chance to meet the most exciting young Fintech companies.
The power of the SWIFT Index in anticipating GDP growth was empirically tested in collaboration with the Center for Operations Research and Econometrics (CORE), a leading interdisciplinary research institute in the fields of econometrics, economic theory, game theory and operations research. This econometrics expertise was essential to assess how the SWIFT Index relates to GDP growth, and to quantify its superiority relative to standard benchmark models.
Whilst the SWIFT Index is specifically relevant to OECD countries, the validation of SWIFT data and methodology by CORE demonstrates the relevance of SWIFT traffic information as a means of understanding economic activity.
The strength of the SWIFT Index is posited on the ubiquity of SWIFT payment traffic, which acts as a mirror of economic activity. The raw data at the source of the Index is the SWIFT MT 103 message. This is a specific message format that enables the bilateral transfer of information about payment transactions between customers of different banks or financial institutions. It is the de facto global standard for cross-border single customer credit transfers and is used primarily for commercial rather than low-value retail payments. The data collected from these messages is therefore fact-based.
Rather than reflecting the sentiment of particular actors, it is an objective measure of real economic activity. To construct the index the header information of MT103 messages is aggregated at a country level providing several million data points each month. In addition to its close correlation with underlying economic activity, the MT103 provides an additional distinguishing advantage for nowcasting: the aggregated volume data is available on a monthly basis within a few days of the end of the preceding month.
