What's Happening?
The Angolan kwanza has been introduced as a settlement currency in the Southern African Development Community (SADC) real-time gross settlement (RTGS) system. This move, announced by Lesetja Kganyago, Governor of the South African Reserve Bank, and Manuel
Tiago Dias, Governor of the Banco Nacional de Angola, aims to boost regional trade and financial integration. The inclusion of the kwanza supports the G20's goals of reducing costs and improving efficiency in cross-border transactions. The SADC-RTGS system, which previously settled transactions exclusively in South African rand, now allows direct settlement in kwanza, reducing foreign exchange conversion requirements and transaction costs.
Why It's Important?
The introduction of the Angolan kwanza into the SADC-RTGS system is a strategic initiative to strengthen regional financial integration and promote the use of local currencies in cross-border trade. This development reduces reliance on non-SADC currencies and enhances the efficiency of regional transactions. By enabling faster settlement, businesses can manage cash flow more effectively and access funds more quickly, fostering a conducive environment for trade, investment, and job creation. The SADC-RTGS system, processing significant transaction volumes, supports economic growth by reducing friction in economic activities and enhancing the security of payments.
What's Next?
The SADC-RTGS system plans to onboard additional regional currencies, such as the Botswana pula, to further enhance its multi-currency capability. This will facilitate greater financial integration and reduce the cost of doing business across borders. The system's expansion is expected to strengthen the position of participating countries within the Southern African and African financial landscape. As more currencies are included, the system will continue to support economic growth by enabling a more connected regional payments system and reducing reliance on foreign currencies and intermediaries.
