(Bloomberg) -- African central banks are working to link the continent's major cross-border payment systems as plans to create the world's largest free-trade zone gain momentum.
A working group of the Association of African Central Banks is exploring ways to connect the technology behind the Southern African Development Community Real Time Gross Settlement System, which is operated by the South African Reserve Bank, with payments systems in east and west Africa, Governor Lesetja Kganyago said in an interview Friday at the World Economic Forum on Africa in Cape Town.
“It is a race to the top,” he said. “Thinking that we would wait and have some big continental payment system? No, you've got to get the payments systems there to connect with each other.”
Linking the systems will help to bolster the African Continental Free Trade Agreement, he said. It will also facilitate intra-regional payments and remove some of the costs associated with having to settle such payments via the U.S. and European banks, he said.
Read more about the African Free-Trade Agreement
The trade agreement, an African Union-led initiative, would cover a market of 1.2 billion people with a combined gross domestic product of $2.5 trillion once its fully operational. All but two of the 55 countries recognized as part of the AU have signed the deal. The mechanics of the agreement are to be negotiated in phases and it should be fully implemented by 2030.
To contact the reporter on this story: Prinesha Naidoo in Johannesburg at pnaidoo7@bloomberg.net
To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Mike Cohen
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