Growth in SWIFT payments points to future economic growth

An established correlation been the volume of SWIFT transfers and economic output suggests the African continent is poised to resume robust growth following a period of slower growth.

SWIFT is the global financial messaging system to effect and verify intra-bank transfers across jurisdictions. Popularly known as SWIFT transfers, the volume of traffic generated by this payment system is a proxy for underlying economic activity.

Growth in Africa is underpinned by a significant increase in payments traffic. According to SWIFT, this indicates that, despite challenging conditions, many countries in Africa continue to see relatively stable economic growth. African payment traffic volumes grew by 16.9% versus 11.6% for the same period last year. Growth was even more pronounced in the Southern African Development Community (SADC), which saw growth of 21.6%. Africa remains the fastest growing region for payments traffic, ahead of the Americas at 11.1%, EMEA at 9.2% and Asia Pacific at 9.6%.

The African securities segment has also witnessed a strong rise in volumes. Securities traffic grew by 14.6%. Compound annual growth for Africa since 2012 has been 13% year on year.

“The SWIFT Index, a methodology for anticipating GDP growth by combining global payments data with actual quarterly GDP growth figures, indicates that SWIFT data is closely correlated to economic activity. Rising SWIFT traffic volumes are therefore an indicator of economic growth.” SWIFT released this data this week at their 24th African Regional Conference in Abidjan, Cote d’Ivoire.

Denis Kruger, Head of Sub-Sahara Africa, SWIFT said: “Africa remains a significant growth area for SWIFT. Traffic volumes are impressive despite challenging economic conditions. As African countries continue to diversify their economies to drive growth, SWIFT is working closely with the financial community to support them in developing the right solutions to meet their needs.”

SWIFT data shows that, in the year to date, 55% of the traffic sent from Africa stayed on the continent, up by 13% on the same period last year. This trend was more pronounced in securities traffic, where 68% of traffic sent from Africa is intra-regional.

Almost 500 representatives of financial service providers are meeting in Abidjan for the SWIFT conference.

SWIFT said the power of the SWIFT Index in anticipating GDP growth was empirically tested in collaboration with the Center for Operations Research and Econometrics (CORE), an interdisciplinary research institution in econometrics, economic theory, game theory and operations research. The strength of the SWIFT Index is posited on the sheer volume of SWIFT payment traffic, which acts as a mirror of economic activity.