By a Correspondent
Southern Africa is moving to expand the use of local currencies in cross-border payments as policymakers seek to reduce transaction costs, deepen financial integration and make it easier for businesses to trade across borders.
The Southern African regional payments system has added the Angolan kwanza as a settlement currency, marking the first expansion of its currency options since the platform was launched in 2013.
The move represents a significant shift for a system that has historically relied heavily on the South African rand for regional transactions. South African Reserve Bank Governor Lesetja Kganyago announced the inclusion of the kwanza on Monday, describing it as an important milestone in the development of the regional payments infrastructure.
The expansion could pave the way for additional currencies to be incorporated into the system, potentially reducing the need for companies trading within the region to rely on third-party currencies and conventional foreign-exchange channels.
For businesses, more direct local-currency settlement could help lower payment and conversion costs, improve the speed of cross-border transactions and reduce exposure to exchange-rate movements involving major international currencies.
The development is particularly significant as African economies push to increase intra-African trade and strengthen regional value chains. Efficient payment infrastructure is widely viewed as a critical component of efforts to translate continental trade agreements into greater commercial activity.
The addition of the kwanza also gives Angola a more prominent role in the region’s financial integration efforts and could facilitate smoother trade flows between Angolan businesses and companies elsewhere in Southern Africa.
However, the success of a broader multi-currency regional payment system will depend on factors including currency convertibility, foreign-exchange liquidity, regulatory coordination and confidence in participating currencies.
The latest development comes as African countries increasingly explore payment systems that allow businesses to transact in local currencies. At continental level, the Pan-African Payment and Settlement System (PAPSS) is also designed to facilitate cross-border payments in African currencies, supporting the broader objective of boosting intra-African commerce.
The expansion of Southern Africa’s regional payment infrastructure therefore signals a growing recognition that financial connectivity is as important as physical infrastructure in driving regional economic integration.
If more currencies are brought into the system and participation expands, businesses could gain a more efficient financial backbone for cross-border trade—potentially helping Southern Africa move closer to a more integrated regional market.