The Central Bank of Nigeria's high value payment system has gone live on SWIFT. The move to SWIFT is a key element of the Central Bank of Nigeria's Payment System Vision 2020 (PSV2020), which calls for a "Nationally Utilised and Internationally Recognised" payments system and provides a robust platform to support Nigeria's continued economic growth.
The adoption of SWIFT for the infrastructure of Nigeria's high-value payments – via its Real Time Gross Settlement (RTGS) system – will support improvements in interoperability of the country's financial infrastructure, helping to improve settlement security and eliminate risk. SWIFT connectivity ensures Nigeria complies with global standards for critical payment infrastructure as set out by the Bank for International Settlements, providing the Nigerian financial system with a future-proof payments infrastructure and helping Nigeria to integrate with other financial markets in the region and globally.
Dipo Fatokun, Director, Banking & Payments System Department, Central Bank of Nigeria, said: "The importance of the payments system in any market economy cannot be over-emphasized. In particular, the link between the efficiency of the payments system, the effectiveness with which monetary policy is conducted, the soundness of the financial sector and, indeed, the overall performance of the economy is very strong. Thus, central banks the world over have more than cursory interest in the development of payments and settlement systems."
The move by the CBN mirrors those of leading payment systems around the world and In Africa. Nigeria is the 20th country in Africa to adopt SWIFT for its domestic payments as well as its international payments infrastructure. Globally, clearing and settlement systems in more than 90 countries, carrying more than 240 million payments a year, already rely on SWIFT.
Using SWIFT provides proven benefits for the broader financial community in Nigeria. Financial institutions and corporates can use the same SWIFT connection for both domestic and international payment traffic. Reusing existing infrastructure and automatically complying with global standards reduces operational costs, improving operational efficiency and reducing operational risk for the entire community.
The move is also an important step for Nigeria within the West African Monetary Zone, a group of six countries (The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone) that plan to introduce a single currency and use a common payment system in order to boost regional trade and investment.
Hugo Smit, Head of Africa South, SWIFT, says: "By ensuring that Nigeria's infrastructure is interoperable with both regional and international platforms, the move to SWIFT means that the Nigerian financial community will be easily able to interoperate within the West African Monetary Zone as this regional harmonisation project matures."
SWIFT is working closely with all the participants in WAMZ towards the development of the regional payment system. Already, payments systems in The Gambia, Ghana, Nigeria and Sierra Leone are live on SWIFT.
Mr Fatokun said: "The support of SWIFT and all other stakeholders for the development of the national payments system is most needed not only in Nigeria but also in the WAMZ region."
Notes to editors:
Financial institutions and regulators worldwide are continuing to seek greater control of the risks associated with payments and global trade. Globally, risk managers are being asked to measure, monitor and reduce exposure.
In response, industry associations and central banks around the world are developing market infrastructure systems for the clearing and settlement of high value interbank payments (RTGS – Real Time Gross Settlement systems) and multi-currency cash payments, with the objective of eliminating "settlement" risk. As such, high value payments transacted over the system are cleared and paid in 'real time', meaning that the money is available for use in the recipient account as soon as the transaction takes place. This supports cash liquidity in domestic markets and ensures that local economies are able to operate smoothly.
The critical nature and the multilateral aspect of payments mean that SWIFT is a natural trusted third party. It offers secure, reliable and proven messaging services dedicated to the financial industry, is the registration authority under ISO for the ISO 20022 message standards, and is supervised by the Committee on Payment and Settlement Systems of the Bank for International Settlements (BIS).
As part of its PSV2020 review processes and to ensure that the country's infrastructure adheres to the highest international guidelines, the Central Bank of Nigeria benchmarked each payments system infrastructure against the BIS Principles for Financial Market Infrastructure. The Central Bank of Nigeria says the successful implementation of the new RTGS System on SWIFT will reduce liquidity risk, eliminate credit risk and increase the efficiency of treasury operations of banks and Discount Houses.
SWIFT is working with other central banks and with several regional economic groupings across Africa on their payment systems, including the Southern African Development Community (the SIRESS payment system), the East African Community (EAPS), Central African States (BEAC), West African States (BCEAO) and the Common Market for Eastern & Southern Africa (REPPS).
For more information, please visit www.swift.com