“This interconnection proves essential to reduce the delays, costs and security of transfers,” underlined Mr. Bouazza during a panel initiated by the Permanent Mission of Morocco to the UN in Geneva,as part of the Public forum of the World Trade Institution (WTO),which takes place from September 10 to 13 at the headquarters of the Organization.
He noted that the adoption in many countries of instant payment systems, based on low-cost alternatives to cash, has opened the way to increased competition in the transfer market.
“These systems have the potential to bring many people into the financial system and to be relevant for interoperable cross-border payments and transfers,” he said during this event chaired by the Permanent representative of the Kingdom. in Geneva, Omar Zniber.
It is in this viewpoint, he said, that African Central Banks, including BAM, are joining forces to integrate their payment systems into the continental PAPSS “Pan African Payment and Settlement System”. The primary ambition is to support trade within the framework of the African Free Trade Area (ZLECAF), he indicated, noting that the PAPSS system allows instant settlement in local currencies operating 24/7 /7.
According to Mr. Bouazza,Bank Al-Maghrib implemented the instant payment system in 2023 and is in the process of upgrading its real-time settlement system,with the aim of meeting the conditions required for it to be interoperable with regional platforms.
In this context, he noted that despite their overall betterment, migrant transfers in Africa continue to face challenges requiring greater mobilization of stakeholders, including UN institutions, governments and Central banks.
Among these challenges,the official cited the necessary mobilization of the institutions concerned on the most vulnerable and costly transfer corridors,and also on the advancement of financial and digital inclusion,with a view to countering informal transfers.
In Morocco, he noted, the improvement in transfers from Moroccans living abroad benefits from an increasingly competitive transfer ecosystem.
He also placed emphasis on optimizing the financial flows of migrants so that the potential of their use can have a greater impact on the development of the countries of the continent. “surveys have shown that migrants are inclined to increase their remittances when economic conditions in their country of origin are favorable,” he argued.
The discussions during this panel, under the theme: ”Migrant remittances, inclusive trade and development”, focused in particular on the factors behind the high cost of remittances, the digital divide, -digitalization of payments, low levels of inclusion, lack of transparency and regulation of the sector and margins applied to currency conversions.
This event, which coincides with the 30th anniversary of the Marrakech Agreements establishing the WTO, was selected from a record number of more than 300 applications received for the 2024 Public Forum, one of the organization’s largest awareness events.
What are the main challenges facing migrant remittances in Africa today?
Interview: Enhancing Financial Inclusion Thru Instant Payment Systems – Insights from Mr.Bouazza
In a recent discussion at the Public Forum of the World Trade Organization (WTO), mr. Bouazza shared critical insights into the evolving landscape of migrant remittances and the role of instant payment systems in enhancing financial inclusion. We sat down with him to explore these themes further.
Q: Mr. Bouazza, thanks for joining us. Can you elaborate on the essential role of interconnection in payment systems?
A: Thank you for having me. The interconnection of payment systems is essential to mitigate delays, reduce costs, and enhance the security of financial transfers. We are witnessing a significant shift globally, where countries are adopting instant payment systems that provide low-cost alternatives to cash transactions. This trend promotes competition in the transfer market, wich is invaluable, especially for migrants sending money back home.
Q: What are some key benefits of these instant payment systems for Africa?
A: The potential of instant payment systems is enormous. They can bring underserved populations into the formal financial system,facilitating interoperable cross-border payments and transfers. This is especially important in Africa, where many individuals remain outside the formal financial ecosystem. African Central Banks, including Morocco’s Bank Al-Maghrib (BAM), are collaborating to align thier payment systems with the Pan African Payment and Settlement system (PAPSS). The goal is to support trade under the African Free Trade Area (ZLECAF) framework and enable instant settlement in local currencies, operating all day, every day.
Q: Could you share what steps Morocco is taking in this direction?
A: Certainly. In 2023, Bank Al-Maghrib implemented an instant payment system and is currently upgrading its real-time settlement system to achieve interoperability with regional platforms. This integration is crucial for enhancing the efficiency of migrant remittances and fostering financial inclusion in Morocco, which benefits increasingly from a competitive transfer ecosystem.
Q: despite advancements,challenges persist. what are the primary obstacles facing migrant transfers in Africa today?
A: Indeed, while we’ve made significant progress, challenges remain. We need to mobilize various stakeholders, including UN institutions, governments, and Central banks, to address the most vulnerable and costly transfer corridors. Furthermore, advancing financial and digital inclusion is vital to counter informal transfers. Vulnerability in migrant transfer systems can lead to increased costs, which ultimately impacts the migrants’ families relying on these remittances.
Q: How do you envision improving the impact of remittances on development in Africa?
A: Optimizing financial flows from migrants can considerably influence development in their home countries. Our research has shown that migrants are likely to increase remittances when their home contry’s economic situation improves. Thus, we should focus on creating favorable conditions in these countries, which includes enhancing financial literacy and fostering a conducive economic environment where migrants feel more empowered to contribute.
Q: What was the central theme of the discussions in the panel you participated in?
A: The theme revolved around “Migrant Remittances, Inclusive Trade, and Development.” We assessed factors like the high cost of remittances,the digital divide,the urgency for payment digitization,clarity levels,and the regulation surrounding currency conversions. Addressing these challenges collectively will create a smoother process for migrants and potentially higher inflows of remittances that can bolster local economies.
Q: Lastly, how do you see the future of financial inclusion through digital payments?
A: The future looks promising. As we continue to witness rapid advancements in technology, and with the commitment from various sectors, we can expect increased accessibility to digital payment methods. This transition will play a pivotal role in enhancing financial inclusion, ensuring that remittances, especially from migrants, can have a lasting impact on the development efforts across the continent.
With efforts in place to optimize instant payment systems and enhance financial inclusion, the future of migrant remittances looks brighter, promising to contribute significantly to Africa’s development goals.