The Bank of Namibia and Angola’s central bank, Banco Nacional de Angola, will explore new areas of co-operation following the non-renewal of a currency exchange agreement that was signed in 2015.
Bank of Namibia Deputy Governor, Ebson Uanguta, told the Windhoek Observer in an interview that the two banks, as part of the Southern Africa Development Cooperation Integrated Regional Electronic Settlement System (SIRESS), will find ways of working together after the currency exchange agreement came to an end last month.
SIRESS is working on a number of projects to integrate banking payment systems in the region.
Uanguta’s remarks follows an announcement last week that the Angolan central bank had settled the US$426 million it owed the Namibian central bank as a result of the currency agreement, which was later cancelled after business people started exchanging large quantities of Kwanza they had in Angola for Namibian dollars.
The agreement was initially meant to help small scale traders in Oshikango and Santa Clara in Angola.
SIRESS is a payment system whose intention is to facilitate payment between SADC countries.
Uanguta said Namibia and Angola can work together under SIRESS to find ways of facilitating trade between the two countries.
He said SIRESS will reduce the cost of electronic money transfers as well as cut down on the amount of time it takes to transfer money.
“If you want to transfer money to a bank in Malawi, you need a corresponding bank in the UK. The money first has to be cleared by a bank in the UK or somewhere in Europe before the money comes back to Malawi.
“What we are trying to achieve with SIRESS is to enhance efficiency of the payment system within the region. Money will no longer go through the corresponding bank in Europe, but will be cleared at the regional clearing house and then it will go to your bank,” Uanguta said.
He said although SIRESS is already in place, some countries in the region have been slow to implement it within their banking systems.
Talking about the benefits of SIRESS to Namibia, Uanguta said in addition to a shorter transfer period, Namibians will also be able to transfer money at lower costs.
“The cost of transferring money will benefit both the banks and the customers.”
During 2017, the total value of payments processed in SIRESS by Namibian banks amounted to N$397 billion.
Of all payments processed in SIRESS during 2017 (N$983 billion), Namibian banks accounted for 40.4 percent.
Giving more details about the currency exchange arrangement with Angola, Uanguta said the initial agreement was meant for trade and nothing else.
“It was not meant for reparations of funds that are in Angola to be brought back here. The purpose was purely for trade, especially for people who live around the border towns, in Oshikango and Santa Clara.”
He said when the central bank saw that the amount of money exchanged was not tallying with statistics, it became suspicious and noticed that the agreement was being abused, and cancelled the deal.
“We had to suspend the first part of the agreement and reverted to a different arrangement whereby we said the two central banks were buying the currencies (Kwanza and Namibia Dollars) in bulk and then reselling them to their respective entities in their countries.”
He could not say whether there was an element of criminality involved.
“The abuse was that the money that was coming in, was not matching the trade statistics, whether it was illegal or not at that time, we could not pick it up, but what we could see, was that it was not matching the trade statistics for what the agreement was intended.”