Governor of the Bank of Ghana, Dr. Ernest Addison is urging banks and non-bank financial institutions on the continent to increase investments in digitisation platforms as well as cyber-security systems to facilitate safe and secure trade transactions through the Africa Continental Free Trade Area, AfCFTA agreement.
According to him, this will ensure the development of a robust financial sector to enable countries to participate in funding trade transactions presented through the AfCFTA platform.
Delivering the welcome address during the Africa Africa Trade roadshow in Accra, Dr. Ernest Addison also called for more investments in infrastructure and financial technology to support regional trade transactions.
“African integration and development is anchored on financial sector development and access to finance and investment. In addition to the fragmented markets, inadequate payment systems infrastructure has been identified as a major constraint to intra-African trade. Payments within Africa are mostly done through correspondent banks before reaching the recipient African neighbour. This comes with high transaction fees, compliance costs, applied foreign exchange conversion rates, and liquidity costs.
Thankfully, with the introduction of the MANSA and the PAPSS platforms, financial transactions within Africa are likely to receive a boost. Afreximbank’s MANSA platform is intended to provide secure and trustworthy means for proper verification of counterparties and due diligence, one of the main challenges facing intra-African trade today. The PAPSS platform will give businesses in Ghana access to the entire African continent and enable them to engage in financial transactions in local currencies,” he said,
While highlighting the opportunities that the AfCFTA presents, Dr. Ernest Addison urged commercial banks to strengthen all risk management systems and scale-up capacity in trade finance to support the private sector.
“Ghana’s banking sector is currently well capitalised, with adequate liquidity to support transactions generated through increased trade. The Bank has also put in place robust regulatory and supervisory frameworks to support in-country and cross-border trade transactions. There are also policies and safeguards to reduce Anti-Money Laundering and Combating the Financing of Terrorism (AML-CFT) activities and create a robust and a sound financial system to support regional trade. Ghana’s financial sector can therefore be instrumental in meeting the funding needs of businesses in the country to trade under the AfCFTA umbrella,” he said.
The AfCFTA is one of the flagship projects of the African Union’s “Agenda 2063: The Africa We Want”, which aims to promote trade among 55 African countries, with a market size of about 1.2 billion people and projected US$450 billion income boost for the continent by 2035.
The main objective of AfCFTA is to create a single market for goods and services and promote the free movement of business persons and investments in Africa. The Agreement seeks to expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation regimes.