SADC payment integration system

In 2013 the Southern African Development Community (SADC) Integrated Regional Electronic Settlement System (SIRESS) became operational in the four countries of the Common Monetary Area (CMA): South Africa, Namibia, Lesotho and Swaziland.

The paper illustrates that SIRESS is a first step to implementing a common electronic cross-border payment system across all member states of the SADC regional economic community (REC). Moreover, although SADC countries are among the most diverse economies in a geopolitical region, financial integration in the region is highest among the CMA countries. Furthermore, interest rate movements in these four countries are highly synchronised.

The document reviews the wisdom of monetary unions in light of the overlapping membership of meant countries in different regional communities, indicating that these countries may be tempted by alternatives to SADC regional integration. This, in turn, may lead to competing policy and regulatory requirements, which will make compliance more difficult to ensure. In addition, the hegemonic relationships among SADC countries, embedded in the differing sizes and levels of economic and political influence of SADC members, is likely to threaten economic and financial integration.

All things considered, the author concludes that the pilot SIRESS project may represent a test of the variable geometry approach to regional processes in SADC, and may provide lessons for the RECs for the future.