The mismatch of financial flows and commercial flows is nowhere more visible than between countries in Africa and in the Asia Pacific region.
Asia Pacific countries are the fastest growing trading partners for most African countries, accounting for 22% of all commercial flows from Africa, but bank-owned messaging network Swift says only 5% of financial flows are sent directly to Asia Pacific banks.
The data highlights that financial flows do not reflect commercial flows, and Swift says this results in a “disconnect” between payment routes and the movement of goods and services. This is particularly the case for flows between Africa and Asia.
Banks in North America, meanwhile, receive almost 40% of the payments sent by Africa. Though only 9% of the commercial flows are destined for the North American region. In total, more than 80% of the transactions from Africa to the United States have their financial beneficiary in another region.
Swift says there are plenty of factors that could influence the direction of payment flows. In the West and Central African region, for example, countries share common currencies and common clearing and settlement infrastructure.
While the dollar is the most important cross-border trading currency, Swift says there are indications that this is set to change.
It also notes that only 2% of trade settlement involves a financial intermediary outside of Africa – compared to 48% of intra-Africa trade settlement overall.
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