G20 targets easier cross-border payments in Africa

In a recent interview at the G20 meeting in Cape Town, South Africa, CNBC Africa's Fifi Peters spoke with Lesetja Kganyago, the Governor of the South African Reserve Bank, about the agenda of the finance track and the actionable plans set to be implemented. Governor Kganyago highlighted the long-standing involvement of central bank governors and finance ministers in addressing global economic issues, dating back to before the G20 summit in 2008. While the call for Africa's seat in the UN Security Council is a matter for foreign affairs ministers, the finance track focuses on reforming global governance systems, particularly in institutions like the IMF and World Bank to ensure African representation. For South Africa, the agenda this year centers around improving cross-border payments, an issue critical for professionals in emerging and developing countries working abroad, as well as for African exporters and importers. The G20 summit in 2020 led to a decision to create a roadmap for reducing the cost of cross-border payments, emphasizing speed, cost-effectiveness, transparency, and accessibility. With the African Continental Free Trade Agreement in motion, a functioning payment system becomes essential for facilitating trade among African nations. Governor Kganyago clarified that the focus on payments is currency agnostic, aiming to facilitate fund movement across borders regardless of the currency involved. In Southern Africa, the launch of the SADC Real-Time Gross Settlement System, which onboarded 15 out of 17 member countries' currencies, enables trade and settlement using regional currencies. While foreign exchange markets still need development, the technology exists for countries to transact in their own currencies, reducing reliance on external currencies. Addressing the political dynamics within the G20, Governor Kganyago emphasized that despite some countries' absence at specific meetings, all members are represented, ensuring views are articulated even in the absence of high-ranking officials. The concern about the G20 presidency moving away from the Global South after four years is met with reassurance based on past experiences where issues raised by emerging economies were not overshadowed but rather nurtured. The collaborative nature of the G20 allows for continuity in agenda and decision-making across different presidencies. The conversation also touched on global financial architecture and initiatives like the restructuring of debts for low-income and developing countries, especially in Africa. Discussions around special drawing rights of the IMF aim to make the cost of doing business and accessing capital more equitable. Efforts are ongoing to restructure debt in heavily indebted nations, enhance capital flows to emerging countries, and allocate quotas in a more efficient manner within the IMF to benefit countries genuinely in need. Governor Kganyago's insights reflect the commitment of the G20 finance track to address key financial issues affecting Africa and other developing regions, striving for a more inclusive and efficient global financial system.