SADC REGION

INDUSTRY REPORT
PROGRESS AND CHALLENGES
IN DEVELOPING NATIONAL PAYMENT
INFRASTRUCTURE

SADC REGION INDUSTRY REPORT – DECEMBER 2023 1

REPORT — DECEMBER 2023
INDEX

EXECUTIVE SUMMARY 4

INTRODUCTION AND CONTEXT 6

BANKING INFRASTRUCTURE AND MOBILE TELECOM 10

ADOPTION IN AFRICA

PAYMENT SERVICES IN THE SADC REGION 12

— PAYMENT CARD PENETRATION 12
— MOBILE MONEY PENETRATION 14
— MERCHANT CARD PAYMENTS ACCEPTANCE 16
— INSTANT PAYMENT SERVICES / FAST PAYMENT SERVICES 17

DEEP DIVE COUNTRIES 19

CROSS-BORDER INTERLINKING 23

CONCLUSIONS 24

APPENDIX A – COUNTRY CODES 28

APPENDIX B – NUMBER OF BANKS AND FINANCIAL INSTITUTIONS IN 29

SADC COUNTRIES (2022)

APPENDIX C – FIG. 12’S TIMLINE ISSUES AND RELATED SOURCES 33

SADC REGION INDUSTRY REPORT – DECEMBER 2023 2

SADC Region Industry Report.
Progress and Challenges
in Developing National Payment
Infrastructure
—

Published By
Arkwright Consulting AG
Alstertwiete 3
20099 Hamburg
Germany

Written and edited by:

Francesco Burelli
Peter Großkurth
Lena Büttner
Siu-Liang Hor

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information on the topics of this report please
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Arkwright Consulting AG
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SADC REGION INDUSTRY REPORT – DECEMBER 2023

E XECU TIVE S UMMARY

Electronic payment developments and deployments have been

undertaken for many years. The SADC payments infrastructure
has been developing for over 50 years, yet there has been limit-
ed progress regarding financial inclusion measured in terms of
access and usage to digital payments, indicated by the limited
penetration of card adoption and merchant terminalization.
Despite the wider adoption of mobile money in comparison to
cards, its usage is far from universal, with a significant number
of merchants not accepting electronic payments.

Despite various initiatives, similar to what is observed in other

regions, the development of reliable, resilient, and fit-for-pur-
pose payment infrastructure would appear to be challenging.
The development of instant payment systems (IPS) by nation-
al switches appears to be slow, and press announcements are
often not followed by any actual increase in transactions. This
would appear to be particularly the case for interlinking efforts.

In the analysis of a sample of five "deep dive" countries

(Malawi, Mo-zambique, Namibia, Zambia, Zimbabwe),1 where
central banks have established mandates to use local
infrastructure to provide basic processing services
(authorization and clearing for card present face-to-face
transactions and person-to-person remittances) but seem to
lack support for authentication services for e-commerce
transactions and the processing of enhanced transactions
(e.g., tokens). This might represent a major roadblock for the
deployment of e-commerce and innovative payment services
in the domestic space.

Mandated local switches have limited participation, with only

major banks and mobile money operators connected to them.
This might hamper local fintech development and might
restrict access to new payment solutions (e.g., global wallets
likeApplePay and GooglePay) in local markets, possibly,
compounding the challenges related to innovation and
inclusion.

SADC REGION INDUSTRY REPORT – DECEMBER 2023

1
Country abbreviation table is available in Appendix A. 4
 Overall, the adoption of electronic payments in the retail seg-
ment remains relatively low. This is especially true for small and
micro-merchant segments, which require innovative payment
services (e.g., Soft PoS, e-commerce card-on-file, etc.) that are
currently not supported by mandated domestic switches.

From a long-term perspective, the potential lack of

infrastructure enabling the development of innovative payment
services might limit the potential social and economic growth
derived from realizing the full potential of fintechs. It might
also hinder the achievement of wider financial inclusion and
might lead to stagnation in the electronic payments markets.
Authorities and banking associations aiming to enhance the
development of such a processing infrastructure should make
a realistic assessment of the needed capabilities, of direct and
indirect risks, and of possible outcomes.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 5

INTRODUCTION AND
CONTEXT

Electronic payments systems are complex, multi-layered infrastruc-

ture whose adoption is led by a combination of drivers. Regardless of
being driven by consumer adoption out of the necessity to make online
purchases, the convenience of not having to carry cash or a wallet, or
of governments pursuing financial inclusion by curbing cash in support
of economic formalization, no payment innovation would be possible
without the foundational work and innovation that has been carried
out over the years by central banks and private companies alike on the
back end. No payment front-end innovation could exist without the
modernization of switching, clearing, and settlement infrastructure.

Fig. 1 — Domestic retail payments infrastructure
(not inclusive of closed-loop wallets and mobile
money, 2023).2
REAL-TIME PAYMENT PLATFORM IN OPERATION
REAL-TIME PAYMENT PLATFORM UNDER DEVELOPMENT
EXISTING DOMESTIC CARD SCHEME(S)
EXISTING DOMESTIC CARD SCHEME(S) AND
REAL-TIME PAYMENT PLATFORM
Since the 1960s, we have seen ongoing waves of investment and
initiatives in payments infrastructure, with an industry that is contin-
ually evolving along a slow maturity cycle, to a point at which many
countries globally either have invested, or are currently investing in,
Card Payments (CP), and now Immediate Payments Infrastructure /
Fast Payments (IPS / FPS), in addition to Automated Clearing House
(ACH) and Real-Time Gross Settlement Systems (RTGS).

< 10%
10-20%
20-30%
20-30%
>50%
NO DATA AVAILABLE 2
Arkwright Research.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 6

NO PAYMENT FRONT-END As of today, many countries have, or are in the advanced stages of
INNOVATION COULD development of a CP or an IPS / FPS infrastructure.
Fig. 1 provides an illustrative graphical map of the deployments of
EXIST WITHOUT THE payments infrastructure.
MODERNIZATION OF
SWITCHING, CLEARING, The development of domestic retail payments switch infrastructure
AND SETTLEMENT started in the US and Europe, and it is now part of a long wave of ini-
INFRASTRUCTURE tiatives, from corporate initiatives to a mixed range of initiatives often
driven by central banks, with or without the involvement of the local
payments industry.

These initiatives are taking place in countries of all sizes, often with
an ambition to drive financial inclusion and economic development,
with funding from donor organizations and development agencies.
CP initially, and subsequently IPS / FPS developments, have been
underway for years. This report reflects research done on a specific
region with a sample of countries, investigating the features and
adoption of electronic payments. The region in question is the South-
ern African Development Community (SADC).3

Within the African continent, the region represents 27% of the adult
population of Africa and 27% of its GDP.
For reference, Fig. 2 provides an illustration of GDP and population
distribution across the continent.

3
The Southern African Development Community is a political and economic institution
that provides a framework for regional integration in the region. It comprises 16 countries;
Angola, Botswana, Comoros, Democratic Republic of Congo, Eswatini, Lesotho, Madagas-
car, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, United Republic of
Tanzania, Zambia, and Zimbabwe: https://www.sadc.int/faqs/what-sadc.
4
The World Bank; Arkwright research. Note: For missing data points, ER (Eritrea) and SS
(South Sudan), prognosed data from IMF was used instead; adults are classified as people
of the age group 15+.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 7

 0 2 4 6 8 10 12 14 16
IN K

9.7 ZW 21
11.4 ZM 30
1.6 NA 13
18.6 MZ 18
11.7 MW 13
37.1 TZ 76
SADC REGION

42.8 ZA 406
SADC

0.1 SC 2
1.1 MU 13
18.0 MG 15
1.5 LS 3
0.8 SZ 5
58 CD 52.9
0.5 KM 1
1.8 BW 20
19.6 AO 107
5.3 TG 8
5.3 SL 4
10.1 SN 28
124.5 NG 477
13.4 NE 14
2.8 MR 10
11.9 ML 19
WESTERN

3.2 LR 4
1.3 GW 2
8.1 GN 21
21.1 GH 73
1.5 GM 2
16.5 CI 70
0.4 CV 2
12.8 BF 19
7.7 BJ 17
9.3 TN 47
27.7 SD 52
REST OF AFRICA

NORTHERN

27.5 MA 134
4.9 LY 46
74.5 EG 477
31.1 DZ 192
1 ST 0.1
1.5 GA 21
1.0 GQ 12
MIDDLE

3.5 CG 15
9.3 TD 13
2.9 CF 2
16.1 CM 44
26.1 UG 46
6.1 SS 6
9.3 SO 8
8.5 RW 13
33.6 KE 113
EASTERN

74.5 ET 127
2.2 ER 3
0.8 DJ 4
7.0 BI 3

ADULT POPULATION (AGE 15+) IN MN (2022) GDP IN BN USD (2022)

Fig. 2 – Adult population and GDP distribution

in Africa.4 GDP PER PERSON IN K USD DEEP DIVE COUNTRIES

SADC REGION INDUSTRY REPORT – DECEMBER 2023 8

 ABSOLUTE VALUES ABSOLUTE VALUES ABSOLUTE VALUES
0 10 20 30 40 50 60 0.0 0.2 0.4 0.6 0.8 1.0 0.0 0.2 0.4 0.6 0.8 1.0

ZW 6 ZW 4 ZW 293
ZM 6 ZM 3 ZM 238
NA 16 NA 11 NA 656
MZ 50 MZ 4 MZ 386
MW 94 MW N/A MW 202
TZ 76 TZ N/A TZ 233
SADC REGION

ZA 8 ZA 45 ZA 841
SADC

SC 42 SC 47 SC N/A
MU 4 MU 15 MU 900
MG 3 MG 3 MG 140
LS 14 LS 4 LS 444
SZ 39 SZ 7 SZ 385
CD 1 CD N/A CD 96
KM 6 KM 4 KM 305
BW 35 BW 9 BW 499
AO 16 AO 9 AO N/A
TG 7 TG 6 TG 249
SL 2 SL N/A SL 138
SN 7 SN 5 SN 281
NG 14 NG 4 NG 451
NE 2 NE 2 NE 86
MR 11 MR 11 MR 204
ML 4 ML 5 ML 284
WESTERN

LR 4 LR 3 LR 286
GW 6 GW 4 GW N/A
GN 3 GN 3 GN 138
GH 11 GH 6 GH 392
GM 8 GM 7 GM 314
CI 6 CI 5 CI 206
CV 48 CV 31 CV N/A
BF 4 BF 3 BF 211
BJ 4 BJ 3 BJ 238
TN 8 TN 22 TN 357
REST OF AFRICA

SD 16 SD N/A SD N/A
NORTHERN

MA 30 MA 24 MA 422
LY 17 LY N/A LY N/A
EG 29 EG 7 EG 261
DZ 8 DZ 5 DZ 441
ST 31 ST N/A ST N/A
GA 10 GA N/A GA 276
GQ 11 GQ 7 GQ N/A
MIDDLE

CG 11 CG N/A CG 181
TD 2 TD 1 TD 183
CF 1 CF N/A CF N/A
CM 5 CM 2 CM 235
UG 1 UG 2 UG 366
SS 1 SS 1 SS 55
SO N/A SO N/A SO N/A
RW 4 RW 5 RW N/A
EASTERN

KE 7 KE 5 KE 506
ET 9 ET N/A ET 461
ER N/A ER N/A ER N/A
DJ 16 DJ 9 DJ N/A
BI 1 BI N/A BI N/A
NO. OF ATMS PER 100K ADULTS BANK BRANCHES PER 100K ADULTS NO. OF BANKED PEOPLE PER K ADULTS
(2021) (2020) (2021)

Fig. 3 – Share of banked population, banking,

and ATM penetration in Africa.5 AVERAGE PER REGION DEEP DIVE COUNTRIES

SADC REGION INDUSTRY REPORT – DECEMBER 2023 9

BANKING INFRASTRUCTURE
AND MOBILE TELECOM
ADOPTION IN AFRICA

The countries of the SADC region have different degrees of banking

infrastructure and penetration of mobile money solutions. From the
perspective of banking, the SADC region has some of the highest
penetration of banking infrastructure and a relatively high share of
banked population within the African continent. Fig. 3 provides a
comparative illustration of the shares of banked population, bank
branches and ATM penetration within the continent.

Unsurprisingly, the three variables are correlated, with R2=0.65

between the number of bank accounts per 1,000 adults and bank
branches per 100,000 adults (2020) and R2=0.74 as the correlation
between the number of adults with bank accounts per 1,000 adults
and the number of ATMs per 100,000 adults.
Thus, SADC is an African region in which the population tends to be
more banked, with 401 out of 1,000 adults having a bank account.
Mobile telecoms have been the foundation of the development of mo-
bile money since the establishment of M-Pesa by Safaricom in Kenya
in 2007. Mobile, especially the use of USSD messaging, has been
instrumental in enabling the emergence of new channels for financial
services aimed at underserved segments of the population in Africa.

Fig. 4 illustrates SIM card penetration and the maturity of the telecom
infrastructure in Africa. The latter is expressed through GSMA’s Mobile
Connectivity Index (MCI). This is a composite score based on four
“overarching enablers”: infrastructure (availability of high-performance
mobile internet network coverage), affordability (availability of mobile
services and devices at price points that reflect the level of income),
consumer readiness (citizens’ awareness and skills needed to use the
internet) and content and services (availability of secure online content
and services accessible and relevant to the local population). A score
larger than 65 is considered high. It can be seen as an indicator of a
country's readiness for mobile money adoption.

Compared with other African regions, the SADC region on average

ranges in the medium to higher tiers regarding both metrics.

5
The World Bank; Arkwright research. Note: Adults, classified as people of the age 15+, are
included in the percentage of respondents who report having an account (by themselves
or together with someone else) at a bank or another type of financial institution (The World
Bank, 2020).

SADC REGION INDUSTRY REPORT – DECEMBER 2023 10

 42 ZW 9
40 ZM 10
47 NA 12
33 MZ 4
38 MW 6
44 TZ 8
SADC REGION

46 ZA 17
SADC

67 SC 17
N/A MU 15
46 MG 6
35 LS 8
67 SZ 12
34 CD 5
32 KM 10
45 BW 16
49 AO 4
23 TG 7
28 SL 10
56 SN 12
36 NG 9
35 NE 6
46 MR 14
52 ML 11
WESTERN

23 LR 3
33 GW 11
36 GN 10
31 GH 12
32 GM 10

32 CI 16
51 CV 10
34 BF 11
48 BJ 10
54 TN 13
REST OF AFRICA

61 SD 8
NORTHERN

32 MA 14
62 LY 21
57 EG 9
65 DZ 11
N/A ST 8
54 GA 13
32 GQ 5
MIDDLE

33 CG 10
24 TD 6
23 CF 3
45 CM 8
43 UG 7
9 SS 3
N/A SO 5
42 RW 8
EASTERN

50 KE 12
34 ET 5
N/A ER 5
N/A DJ 4
23 BI 6

GSMA MOBILE CONNECTIVITY INDEX (2022) MOBILE SIM CARDS PER K ADULTS (2021)

Fig. 4 – Mobile telecom penetration and matu- AVERAGE PER REGION DEEP DIVE COUNTRIES
rity in Africa.6
6
The World Bank (2021); GSMA (2022). Note: Adults are classified as people of the age
group 15+.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 11

PAYMENT SERVICES IN
THE SADC REGION

Domestic switches and payment infrastructure in the SADC have been

developing for over 50 years, with a range of initiatives that began
in 1972 with the launch of Bankserv in South Africa. Since then, the
region has seen a wide range of development initiatives for electronic
payments, as illustrated by selected key milestones in Fig. 5.

Payment Card Penetration

The level of payment card penetration varies strongly across the
Fig. 5 — Timeline of illustrative payments
developments in the SADC region (non- SADC region, and, despite initiatives in domestic payments infra-
exhaustive). structure, most countries have limited card penetration.

Launch Zimswitch Launch Multicaixa Start of Foundation

the domestic card the domestic card operations of of SADC TCIB
in Zimbabwe in Angola SADC-RTGS a cost-effi-
automated in- cient solution Launch
Introduction Launch terbank settle- for high and of Payshap
of RTC in of Natswitch ment system low volume a real-time
Launch of South Africa second for high-value cross-border payment
Bankserv first real-time attempt of transactions, payments platform
Africa's SADC Banking Launch of clearing national switch operated by SA in South
largest Association Namswitch in Africa in Malawi Reserve Bank Africa
"Automated coordinate the domes-
Clearing cross-border tic switch
House" banking activities in Namibia

1972 1992 1994 1998 2002 2004 2005 2006 2007 2010 2011 2013 2014 2015 2022 2023

Foundation of French MMO Foundation Expansion Airtel First interoperability

SADC Orange start of of SASSA in 15 African agreement
aiming to min- operations Created to administer countries after between mobile
imize poverty in first SADC South Africa's social acquisition of Zain networks in Tanzania
and strengthen country Botswana security system
regional integra- Launch of PaPPS
tion; currently
the Pan-African Payment
16 member
Launch of M-Pesa & Settlement System by
countries Launch
the African Union and the
a mobile phone-based of EcoCash
Launch of Malswitch African Export-Import Bank
money transfer service, Zimbabwe’s (Afreximbank) aims to enable
First attempt of national operating in eight SADC biggest mobile cross-border payments
switch in Malawi countries money operator

Despite technical improvements and infrastructure cost reductions over the last 50 years, and an increase in initiatives,
domestic switches still face challenges related to availability, innovation, inclusiveness, and interlinking

SADC REGION INDUSTRY REPORT – DECEMBER 2023 12

 Fig. 6 illustrates the number of cards and the level of card penetra-
tion in the region.

13 out of 16 SADC countries have a card penetration of less than

Fig. 6 — Payment Cards penetration in SADC 30%. South Africa is the only country where more than 50% of the
(2021).7 adult population (age 15+) is classified as cardholders, meaning that
they own at least one or more payment cards (all card types and
>75% 20-30%
50-75% <20% brands), likely thanks to the success of the card-based SASSA gov-
30-50% NO DATA ernment social payouts solution.

MW TZ
2.0MN CARDS 11.4MN CARDS

ZM KM
3.2MN CARDS 0.04MN CARDS

SC
N/A

MG
CD 2.6MN CARDS
6.0MN CARDS

AO MU
5.7MN CARDS MMPI: N/A
MCI: 66.9

BW
1.2MN CARDS

NA
1.7MN CARDS
MZ
8.6MN CARDS
ZA
63.5MN CARDS SZ
0.3MN CARDS

ZW LS
3.6MN CARDS 0.8MN CARDS

7
The World Bank Data 2021 (absolute number and percentage of adult cardholders - all
brands included), Arkwright analysis: Total number of cards from various sources (e.g.
Statista, central banks); estimation of average number of cards per cardholder was used
to estimate total number of cards for missing countries.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 13

 Tanzania has the second-highest total number of payment cards; but
at the same time, the percentage of cardholders is very low.
This indicates that a single cardholder usually owns multiple cards.

The countries with the smallest share of adult cardholders are the
Democratic Republic of the Congo, Madagascar, Comoros, and
indeed Tanzania, as well as four of the five deep-dive countries: Mo-
zambique, Malawi, Zambia, and Zimbabwe, see chapter 5.

In these countries, less than 30% of the adult population (age 15+)
owns a payment card.8

Mobile Money Penetration

By the end of 2021, around 47% of the SADC population subscribed
to mobile services. Mobile money is most prevalent in regions with
low card penetration, such as Tanzania, Zimbabwe, and Mozambique.

Fig. 7 — SADC Infrastructure – Mobile money Fig. 7 provides a snapshot of mobile money penetration in the region.
prevalence in the SADC region (2022).9 The coloring of the map relates to the Mobile Money Prevalence In-
dex (MMPI). It is a measure of the prevalence of active mobile money
VERY HIGH LOW
HIGH VERY LOW accounts and the accessibility of mobile money agent networks.
MEDIUM NO DATA It does not consider the number of mobile money providers.

MW TZ
MMPI: MEDIUM MMPI: VERY HIGH
MCI: 34.2 MCI: 45.6

ZW KM
MMPI: MEDIUM MMPI: N/A
MCI: 37.6 MCI: 28.3

ZM SC
MMPI: VERY HIGH MMPI: N/A
MCI: 43.7 MCI: N/A

CD MG
MMPI: MEDIUM MMPI: MEDIUM
MCI: 22.9 MCI: 32.5

AO MU
MMPI: VERY LOW MMPI: N/A
MCI: 43.8 MCI: 66.9

NA
MMPI: LOW MZ
MCI: 46.2 MMPI: HIGH
MCI: 34.5
BW
MMPI: HIGH
SZ
MCI: 56.2
MMPI: VERY HIGH
MCI: 48.6

ZA LS
MMPI: LOW MMPI: VERY HIGH
MCI: 66.7 MCI: 44.9

8
Ibid.
9
Mobile Money Prevalence Index & Mobile Connectivity Index (GSMA, 2022); Arkwright
research.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 14

 Tanzania, Zambia, Lesotho, and Eswatini have very high levels of
mobile money adoption. This high mobile money dependency is to be
expected given that less than 30% of adults own a payment card.

In Mozambique, the usage of mobile money is high despite bad connec-

tivity. This is also consistent with a low number of adult cardholders.

Botswana has high levels of mobile money adoption. The medi-

um-high MCI indicates that it performs well on at least two connec-
tivity enablers but does not necessarily have a high connectivity rate.
Only 30 to 50% of adults own a payment card in Botswana. Low and
very low mobile money adoption can be observed in Angola, Namib-
ia, and South Africa. In the case of South Africa, this is despite the
existence of a high connectivity score – but is not surprising due to
the high adoption of payment cards.

By the end of 2021 around 183 million people subscribed to mobile

Fig. 8 — Share of people connected to mobile services in the SADC region, representing 47% of the region’s popu-
internet services (2020).20 lation. GSMA expects a subscriber penetration of 50% by the end of
2025. This would result in around 195 million subscribers.

With more than 40% of the region’s population under the age of
15, young consumers owning a mobile phone for the first time will
23% remain the primary source of growth for the foreseeable future. The
29% connection to mobile internet services appears to have much more
untapped potential, as illustrated by the data on the share of people
connected to mobile internet services in Fig. 8.

Based on the latest data available,11 only 23% of the population of the
SADC region is connected to a mobile internet service, while 48% of
48%
the population is considered to be the usage gap.

In absolute numbers, this amounts to around 190 million people.

The usage gap consists of people who could be connected, since
they live within areas covered by mobile broadband networks, but do
CONNECTED
USAGE GAP
not yet use a mobile internet service.
COVERAGE GAP
10
The mobile economy Sub Saharan Africa (GSMA, 2022).
11
Ibid.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 15

 The coverage gap consists of the share of people who do not have
access to a mobile internet service. It is estimated that 29% of the
population lives within this region. Another reason for the low smart-
phone adoption rate, aside from the coverage gap, is the low cover-
age of 4G devices, which offer a better user experience.

The barriers to mobile internet adoption are especially persistent among

those segments of the population that are poor, live in rural areas, wom-
en, and the elderly, which presents further challenges to inclusion.

Merchant Card Payments Acceptance

It comes as no surprise that micro-merchants represent most mer-
chants across the region, comparable to many other countries globally.
In the sample of SADC region countries below, Mauritius and South
Africa appear to have a higher share of larger merchants in total.

Fig. 9 — Merchant by type in SADC (selected The market statistics illustrated in Fig. 9 are based on data about the
countries, 2022).12 number of micro-merchants published by different sources. We as-
sume that these numbers likely underestimate reality as a large share
LARGE MERCHANTS
SME MERCHANTS
of merchants, especially smaller merchants, is not actually registered
MICRO-MERCHANTS as a company and operates informally.

COUNTRY NO. OF POS NO. OF POS

TERMINALS TERMINALS PER
2023 IN K MERCHANTS
NUMBER OF ENTERPRISES IN THOUSAND THOUSAND (E) 2023 (E)

32 TZ 22.0 7

TZ 3.075 3.195 ZA 673.3 254

88
ZW 150.0 76

53

MW 4.6 3

ZA 1.404 1.196 2.653

ZM 16.0 1.5

20
MU 14.4 115
ZW 1.591 363 1.974

MZ 32.6 373
17

MW 1.184 416 1.617

LS 16.7 192

64

ZM 1.099 297 1.460 NA 17.8 522

MU 125
MZ 87
LS 84
NA 34

12
Arkwright’s estimates for merchant numbers are based on data from the World Bank,
central banks, development banks and government publications. Micro-merchants: com-
panies with up to 5/10 employees, SME merchants: up to 100/250 employees.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 16

 Instant Payment Services / Fast Payment Services
Rollout of IPS / FPS is limited in the region, with four SADC countries
claiming to be developing IPS, but only two currently reporting (pilot /
early) transactions. While IPS / FPS are relatively recent, some sys-
tems ap-pear to be settling on a deferred basis, making them near-real
time / FPS. The nature of hybrid switches also makes it challenging to
define what real-time is and what are “only” payments are being settled
on a more frequent batch processing basis.

Tanzania’s Instant Payment System, established in 2022, appears to

be live but there is no reported activity. Pilot transactions were run
throughout 2022 and, possibly, due to the recent launch no volumes
or transactions are officially reported.

Zimbabwe’s Zimswitch Instant Payment Interchange Technology

(ZIPIT), launched in 2020, also appears to be live but with no reported
transactions. ZIPIT is designed to run in parallel with traditional RTGS
(high-value) but it is intended for real-time smaller transfer amounts
with lower transfer costs.

South Africa’s Payshap is the most recent of the four and was
launched in 2023 with the following banks participating: Absa, First
National Bank, Nedbank, Standard Bank, Discovery Bank, Tyme Bank,
and Capitec Bank.

Namibia’s Nampay was launched in 2021. Nampay is often called an

instant payment system, however, its settling is scheduled only three
times a day, rather making it a near-real-time payment system.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 17

Fig. 10 — Immediate Payments / Fast Paymen-
ts in SADC.13

TANZANIA
– TANZANIA INSTANT
PAYMENT SYSTEM (TIPS)
IN 2022

ZIMBABWE
— ZIMSWITCH INSTANT
PAYMENT INTERCHANGE
TECHNOLOGY (ZIPIT)
NAMIBIA
IN 2020
– NAMPAY IN 2021

SOUTH AFRICA
– REAL-TIME CLEARING
SOUTH AFRICA (RTC)
IN 2006
– PAYSHAP IN 2023

13
Arkwright research.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 18

5. DEEP DIVE COUNTRIES

LOOKING AT THE To further the analysis, we have looked at a sample of five SADC re-
CHARACTERISTICS gion countries. These have been selected based on the fact that they
have a mandated domestic switch that has been in operation for long
OF THESE MANDATED enough to be reasonably considered “operationally established”.The
SWITCHES, THE FIRST five countries in scope for a deep dive are Malawi (MW), Mozambique
POINT TO NOTE (MZ), Namibia (NA), Zambia (ZA), and Zimbabwe (ZW).Of these, the
IS THE LIMITED switch that has been in operation for the longest duration is
PARTICIPATION Zimbabwe’s Zimswitch, established in 1994, and the mostrecent one
is Zambia’s NFS, established in 2018. Of these five, Zim-babwe also
has a national card scheme, ZimSwitch Card, while Namibia has no
active mobile money solutions available to its citizens.The summary
profile of these five domestic switches is displayed inthe table in Fig.
11.

Looking at the characteristics of these mandated switches, the first

point to note is the limited participation. Across all five countries, the
number of connected banks and non-banks is a minority of the total fi-
nancial organizations in the country.15 While not all non-bank financial
institutions may have a payment-centric business model, the limited
participation in the switches is striking, leading to the question of their
roles within their respective markets as limited participation is a major
barrier to competition and market innovation.

The second point to be noted is that all five switches in the sample are
hybrid switches enabling interoperability between accounts-based
and mobile money payments. All five mandated switches process
transactions of international scheme-branded cards and mobile
money transactions and, in the case of Zimbabwe, also domestic card
scheme transactions.

Use cases appear to be limited, with no switch seeming to be able to

process tokenized transactions, contactless transactions, and with
only one, Namibia’s Namswitch, supporting a degree of e-commerce
transactions. As a result, these countries may not be benefitting from
the payment innovationsseeing already in other parts of the globe.

14
Central banks’ and switch owning organizations’ reports and websites, Arkwright
research.
15
Number of financial institutions in each country available in Appendix B.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 19

 MALAWI MOZAMBIQUE NAMIBIA ZAMBIA ZIMBABWE

KEY INFORMATION

POPULATION 20.4MN 33.0MN 2.6MN 20.0MN 16.3MN

NO. OF (ACTIVE)
MOBILE MONEY 2 3 0 3 2
OPERATORS

NO. OF BANKS 10 19 9 18 21

NO. OF NON-BANK
FINANCIAL 305 44 649 124 187
INSTITUTIONS

SHARE OF ELEC-
TRONIC PAYMENTS 10% 31% 31% 11% 14%
IN RETAIL

DOMESTIC SWITCH

NAME NATSWITCH SIMO REDE NAMSWITCH NFS ZIMSWITCH

LAUNCH 2010 2014 2004 2018 1994

NATIONAL SWITCH BANCO

OWNERSHIP NAMCLEAR ZECHL ZIMSWITCH
LIMITED DE MOÇAMBIQUE

GOVERNMENT
NO YES YES YES YES (60%)
PARTICIPATION

HYBRID SWITCH YES YES YES YES YES

CONNECTED BANKS 10 18 9 18 19

CONNECTED
2 3 0 6 6
NON-BANKS

TRANSACTION
11.4MN N/A N/A ZK61.4MN N/A
VOLUME

TRANSACTION VALUE MK322.7BN N/A N/A ZK44.6BN N/A

DOMESTIC
TRANSACTION OF
YES YES YES YES YES
INTERNATIONAL
PAYMENT SCHEMES

SWITCH USE CASES

CASH DISBURSEMENT YES YES YES YES YES

CARD PRESENT
YES NO YES YES YES
CHIP & PIN

CARD PRESENT
NO NO NO NO NO
CONTACTLESS

CARD PRESENT YES YES YES YES YES

P2P (REMITTANCES) YES YES YES YES YES

CARD NOT PRESENT NO NO YES NO NO

ACCOUNT-TO-
YES YES YES YES YES
ACCOUNT

TOKENIZATION NO NO NO NO NO

Fig. 11 — Domestic switches’ and related

markets’ characteristics.14

SADC REGION INDUSTRY REPORT – DECEMBER 2023 20

 Criticism from System failures Criticism Infrastructure issues due Functionality Long processing
banks High number National to resistance from banks issues times
MALAWI Banks fear risk of system Bank Banks do not comply with Downtime and According to the
2010 to stability failures in 2016; of Malawi the rules of Natswitch and do not connectivity World Bank there
LAUNCH of financial banks were criticizes let customers from other banks issues between is a need to
NATSWITCH system due unable to fragile withdraw cash at their ATMs bank networks improve
to unreliable disburse cash system of and national transaction
national switch Natswitch switch processing times
system

2013 2016 2017 2021

SIMO Rede blackmailed Outage of SIMO network ATM and POS SIMO blackout Failure of SIMO’s
from software provider Affecting SIMO’s credibility blackout Blackout of networks electronic payments
MOZAMBIQUE Bizfirst and damaging trust Widespread interbank system, network
2014 As a result debit cards between customer outage caused causing long lines at Failure is rumored
LAUNCH stopped working and service provider by technicians ATMs to be the result
SIMO REDE at most ATMs and POS trying to fix of management
machines. a minor issue deficiencies
Shows dependency
on professional
third parties

2018 2019 2020

Nationwide internet banking Technical issues IT-rollout-related Increase in fraud cases

outages at Namclear challenges of Namswitch since 2021
NAMIBIA Minor network outage System failure After IT rollout some According to Bank of Namibia
2004 in South Africa affected caused issues transactions were the total value of fraud increased:
LAUNCH the host of the Namibian at POS machines, not routed correctly payment card fraud (+9%), EFT
NAMSWITCH internet banking system affecting all bank fraud (+80%), e-money payments
cards fraud (+62%)

2014 2021 2023

Zambia is proven to struggle
developing digital financial
ZAMBIA systems
2018 BankservAfrica criticizes Zambia's
LAUNCH financial market regarding
NATIONAL fraudulent transactions by service
FINANCIAL provider, insufficient government
SWITCH funding, system failures, lack of
(NFS) adoption by market participants,
and inefficient agent management
ZIPPS availability National Payment System
level goes down faces technical and cyber-
due to technical security risks
challenges According to the Bank
Reduced availability of Zambia there are major
of 99% in 2021 deficiencies in the national
(vs. target of 99.9%) payment system, incl.
due to infrastructure technical and cybersecu-
issues rity risks, and increased
downtime
Management and organisation
of national clearing house needs
improvement
The self-assessment report
of ZECHL reveals need for
improvement of management
and organisational aspects, incl.
comprehensive risk management,
set of rules for governance and
disclosure, and key procedures

2019 2022 2023

Outage at POS Outage of Zimswitch EcoCash initially Errors at POS terminals Security issues of Lack of innovation
terminals system refused to join Several banks had merchant payments Lack of pressure
ZIMBABWE Failure of Zimswitch Due to a system Zimswitch issues with their Before implementa- to innovate results
1994 system at POS failure, POS terminals network cobranded Zimswitch tion of “ZIPIT Smart” in improvable
LAUNCH terminals is causing stopped working Resistance from cards. After swiping the account number service offer, es-
ZIMSWITCH inconvenience to for three hours. largest mobile them at POS terminals, was needed to execute pecially Zimswitch
consumers in light The online banking money provider funds got deducted purchases, which was internet V-Pay-
of low withdrawal system ZIPIT didn’t EcoCash to join from the customer’s ac- not safe and prone ments solution is
limits in place at the allow transfers the Zimswitch count, but the payment to errors. As a result criticised
time between banks network did not go through ZIPIT was only used
to the merchant for money transfer

2008 2017 2020 2021

Fig. 12 — Sample of challenges reported by

local press affecting the domestic switch.16

SADC REGION INDUSTRY REPORT – DECEMBER 2023 21


Fig. 13 — List of challenges by category based
on frequency and estimated severity.17
Looking further at the reliability of the switch, by doing a comprehen-
sive scan of local press and publicly reported issues, several challeng-
es appear to be common across all five markets. Of these, technical
issues and related availability, and the ability of the switch seem to
prevent and address fraud are the most common challenges.
Fig. 12 illustrates some of these challenges on country-specific
timelines.The categorization of the challenges highlighted by the
research areillustrated in Fig. 13.

SEVERITY
& FREQUENCY
CHALLENGE RATING DESCRIPTION QUOTES

AVAILABILITY – Downtime of overall system, ATMs and PoS machines “Zimswitch goes down for 3 hours today”,
Techzim 2017
— System failure
— Slow speed of processing (long lead times) “The failure of Zimswitch system at
POS terminals is causing inconvenience
to consumers…”, allAfrica 2008

FRAUD – Widespread fraud at any level of banks/ governmental

organizations
— Most common are payment card fraud; EFT fraud
and e-money payments (mobile money) fraud
“…the total value of fraud increased
across all payment streams”, Bank of
Namibia 2022

RULES & — Efficient and comprehensive cybersecurity rules, regula-
REGULATIONS tions/ enforcement measures are rarely implemented
— Resistance to cooperate and to comply with switch rules
— Inefficient agent management challenges functionality
— Dispute management remains an obstacle
“Cybersecurity was identified as the
most significant issue [faced by Zambian]
banks”, PWC 2021

SUPPLY CHAIN — Dependency on external players (e.g., software providers) “…provider demanded a series of
CHALLENGES due to complexity conditions for SIMO to use the hardware”,
— Finding professional players often challenging; Tovela, chairperson of SIMO 2018
cases of fraud & blackmailing are reported

INNOVATION & — The switch network might be seen as a competition “[Zimswitch] V Payments solution […]
COMPETITION by other payment providers, causing resistance to join is terrible and unusable. There hasn’t
— Being a national switch system reduces market pressure been much [innovation] over the past two
to innovate, thereby slowing down progress decades”, Techzim 2020

16
Local press, Arwright research. Sources available on Appendix C.
17
Ibid.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 22

CROSS-BORDER INTERLINKING

Interlinking is a highly complex type of innovation, and it is crucial to

enable cross-border transactions across these switches. It implies
having technical and operational capabilities (e.g. cross-switch con-
nectivity, messaging content, corresponding settlement accounts)
and having the ability to operate across different rules and regula-
tions (e.g. interbank pricing, ability to dispute, etc.).

As of today, there are two cross-border interlinking projects un-

derway: MSME Digital Financial Inclusion Project and SADC TCIB.
Fig. 14 — SADC TCIB. Neither appear to be currently reporting any transactions /
Fig. 15 — MSME Digital Financial Inclusion utilization despitea long series of announcements. Fig. 14 and Fig.
Project. 15 outline the two initiatives.

SADC TCIB MSME DIGITAL FINANCIAL INCLUSION PROJECT

— TCIB (Transactions Cleared on an Immediate — COMESA (Common Market for Eastern and Southern
` Basis) is a cross-border low-value payment Africa) is a union of 21 member states,
scheme that enables the immediate clearing that aims to promote regional integration
of single credit “push” transactions, settled through trade and the development of natural
on a deferred basis, making it a near-real and human resources
time system
– International partners of the Union include the
– Open to all banks and authorized non-banks European Union, World Bank, African Development
across the SADC region. 26 organisations are Bank, US Agency for International Development
officially members
– The COMESA Business Council (CBC) developed the
– Goal is to enable cross-border real-time MSME Digital Financial Inclusion Project in 2021
payments at a lower cost to promote trade
– The goal of the project is to support the
across the SADC region's borders and beyond
design, development and deployment of
an integrated digital financial services
TIMELINE
infrastructure for MSMEs and the customers that
is low-cost, interoperable, real-time and fraud-
resistant
2015 2021 2023
– Currently the project is working on developing
LAUNCH TCIB FIRST TRANSACTION AS PROOF ONGOING PROJECT;
INITIATIVE OF CONCEPT BETWEEN NAMIBIA NO VOLUMES
a Regional Common Digital Payment Policy
AND ZIMBABWE DOCUMENTED guideline and framework -> no payment system
has been implemented yet
13 participating countries – In order to define this common set of rules and
– 2 countries were tested (Namibia and Zimbabwe) regulations, nine pilot countries are currently
but are not reporting any transaction value/volume under examination in a case study: Kenya,
Uganda, Rwanda, Mauritius, Egypt, Ethiopia,
– 11 countries joined officially: Botswana, Malawi, Zambia
Democratic Republic of the Congo, Lesotho,
Malawi, Mozambique, Namibia, South Africa,
Eswatini, Tanzania, Zambia, Zimbabwe

SADC REGION INDUSTRY REPORT – DECEMBER 2023 23

CONCLUSIONS

SIMILARLY TO WHAT The SADC payments infrastructure has been developing for over
CAN BE OBSERVED ALSO 50 years, yet there has been limited progress in financial inclusion,

IN OTHER REGIONS, indicated by the limited penetration rates of card adoption and mer-

THE DEVELOPMENT chant terminalization. Despite the wider adoption of mobile money in

OF RELIABLE PAYMENT comparison to cards, its usage is far from universal, with a significant

INFRASTRUCTURE APPEARS number of merchants not accepting any kind of electronic payments.
TO BE CHALLENGING The table in Fig. 16 illustrates the metrics for the five countries in
scope of the deep-dive analysis.

These numbers appear to challenge the common assumption that the

existence of a local switch, or a local card schem, leads to increased
adoption or use of electronic payments.

Despite various initiatives, similarly to what can be observed in other

Fig. 16 — Share of payment card penetration,
POS terminalization and electronic payments
for retail purchases.18
regions, the development of reliable, resilient, and fit-for-purpose
payment infrastructure may appear to be challenging. The
developmentof IPS with national switches appears to be slow, and
press announcements are often not followed by any reported
increase in transactions. This is particularly true for interlinking
efforts.

MALAWI MOZAMBIQUE NAMIBIA ZAMBIA ZIMBABWE

SHARE OF ADULTS
OWNING A PAYMENT <20% (8.0%) 20-30% (21.9%) 30-50% (48.0%) <20% (10.6%) <20% (17.8%)
CARD (2021)

SHARE OF MER-
CHANTS WITH POS 0.3% 37.3% 52.2% 1.1% 7.6%
TERMINAL (2022)

SHARE OF ELEC-
TRONIC PAYMENTS 10.0% 31.0% 31.0% 11.0% 14.0%
IN RETAIL (2022)

18
Central banks, governmental publications, the World Bank, statistical data banks; Ark-
wright analysis.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 24

 In the analysis of the five "deep dive" countries (MW, MZ, NA, ZM,
ZW), mandated processing entities seem to provide basic
processing services, such as authorization and clearing for card
present face-to-face transactions and person-to-person
remittances.

However, they may be lack support for authentication services and

the processing of enhanced transactions (e.g., tokens), which may
likely actas a roadblock for the deployment of e-commerce and
innovative payment services in the domestic space. Additionally, the
limitedavailability, reliability, and ability to provide effective fraud
preventionat the switch level, likely, may compound the limitations of
such type of infrastructure.

Fig. 17 illustrates the growing complexity of payment innovation.

Local switches have limited participation, with a significant number

of non-bank financial institutions not connected.
This may not promote local fintech development nor facilitate
access to global payment services (e.g., global wallets like ApplePay
andGooglePay) for the local markets. This may add to thechallenges
related to innovation and inclusion.
Fig. 17 — Payment innovation by degree
DEGREE OF COMPLEXITY
of complexity.
HIGH
LOW
ATM

BULK DISBOURSEMENT
CARD PRESENT POS

ACCOUNT-TO-ACCOUNT

QR POS ACCEPTANCE

STANDING ORDER

DIRECT DEBIT

REQUEST 2 PAY

DOMESTIC INTEROPERABILITY

OPEN BANKING

E-COMMERCE

TOKENIZATION

INTERNATIONAL INTERLINKING

SADC REGION INDUSTRY REPORT – DECEMBER 2023 25

 Based on market statistics, regulatory localization of domestic
processing does not appear tohave supported the growth of financial
inclusion, as the adoption of electronic payments in the retail
segment remains relatively low. This may be especially true for small
and micro-merchant segments, which require innovative payment
services (e.g., Soft PoS, e-commercecard on file) that are currently
not supported by mandated domesticswitches.

The card acceptance infrastructure in the studied countries is under-

invested, as PoS terminals are not contactless-enabled, and most
switches do not support e-commerce transactions.
The lack of investments in acceptance networks might be caused,
amongst other factors, by potential limitations in domestic switches'
processing capabilities and the possible absence of incentives on the
acquirers' side to invest in acquiring infrastructure due to a not fully
enabled local fintech ecosystem.

In the long term, the possible lack of infrastructure that supports the
development of innovative payment services might lead to the
stagnation ofelectronic payments markets in the studied countries.
Authorities and banking associations aiming to enhance the devel-
opment of such a processing infrastructure should make a realistic
assessment of the needed capabilities, of direct and indirect risks,
and of possible outcomes.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 26

SADC REGION INDUSTRY REPORT – DECEMBER 2023 27
APPENDIX A
COUNTRY CODES

COUNTRY COUNTRY CODE COUNTRY COUNTRY CODE

ALGERIA DZ LIBERIA LR

ANGOLA AO LIBYA LY

BENIN BJ MADAGASCAR MG

BOTSWANA BW MALAWI MW

BURKINA FASO BF MALI ML

BURUNDI BI MAURITANIA MR

CABO VERDE CV MAURITIUS MU

CAMEROON CM MOROCCO MA

CENTRAL AFRICAN REPUBLIC CF MOZAMBIQUE MZ

CHAD TD NAMIBIA NA

COMOROS KM NIGER NE

CONGO, DEM. REP. CD NIGERIA NG

CONGO, REP. CG RWANDA RW

COTE D'IVOIRE CI SAO TOME AND PRINCIPE ST

DJIBOUTI DJ SENEGAL SN

EGYPT, ARAB REP. EG SEYCHELLES SC

EQUATORIAL GUINEA GQ SIERRA LEONE SL

ERITREA ER SOMALIA SO

ESWATINI SZ SOUTH AFRICA ZA

ETHIOPIA ET SOUTH SUDAN SS

GABON GA SUDAN SD

GAMBIA, THE GM TANZANIA TZ

GHANA GH TOGO TG

GUINEA GN TUNISIA TN

GUINEA-BISSAU GW UGANDA UG

KENYA KE ZAMBIA ZM

LESOTHO LS ZIMBABWE ZW

SADC REGION INDUSTRY REPORT – DECEMBER 2023 28

APPENDIX B
NUMBER OF BANKS AND FINANCIAL INSTITUTIONS
IN SADC COUNTRIES (2022)19

649

327

305

234

183 187

124

101

73
62
55
45 101
34
26 26
21 20 19 19 18 16
10 10 9 8 8
3 6 4
N/A N/A

ZA TZ AO ZW MU CD MZ ZM MG BW MW NA KM SC SZ LS

NO. OF BANKS
1 1 1 2 19 0 1 2 1 6 1 5 15 104 8 3
PER MN ADULTS

NO. OF OTHER
FIS PER 4 0 4 19 32 2 2 11 n/a 31 26 397 n/a 338 417 154
MN ADULTS

DEEP DIVE COUNTRIES

NO. OF BANKS
NO. OF OTHER FINANCIAL
INSTITUTIONS

19
Arkwright research. Note: Number of banks includes local banks and international
banks with a local branch.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 29

AFTER A FAILED ATTEMPT OF ESTABLISHING A FINANCIAL DESPITE BEING IN THE MARKET FOR ALMOST A DECADE,
SWITCH CALLED MALSWITCH, MALAWI HAS DEVELOPED A NEW SIMO REDE IS STILL FACING TECHNICAL PROBLEMS AND IS
DOMESTIC SWITCH NATSWITCH IN 2010 CURRENTLY BEING UPDATED

Deep Dive - Malawi Deep Dive - Mozambique

KEY INFORMATION KEY INFORMATION

Population 20.4 M Population 33.0 M

No. of mobile money operators 2 No. of mobile money operators 3

Share of electronic payments Share of electronic payments

10% 31%
in retail in retail

No. of banks (1) 10 No. of banks (1) 19

No. of non-bank financial No. of non-bank financial

305 44
institutions (2) institutions (2)

Domestic card scheme None Domestic card scheme None

DOMESTIC SWITCH DOMESTIC SWITCH

Connected Connected
Name Natswitch 10 Name SIMO Rede 18
Banks Banks

Connected Connected
Launch 2010 2 Launch 2014 3
non-banks non-banks

National Switch Transaction Banco de Transaction

Ownership 11.4 mn Ownership n/a
Limited volume Moçambique volume

Government Transaction Government Transaction

No MK322.7 bn Yes n/a
participation value participation value
Domestic Domestic
transactions of transactions of
Hybrid Switch Yes Yes Hybrid Switch Yes Yes
intern. payment intern. payment
schemes schemes

USE CASES USE CASES

Cash disbursement Card present Cash disbursement Card present

Card present chip & pin P2P (remittances) Card present chip & pin P2P (remittances)

Card present contactless Card not present Card present contactless Card not present

Account-to-Account Tokenization Account-to-Account Tokenization

COMMENT COMMENT

— Natswitch is a hybrid switch processing Account-to-Account, card,
and mobile money transactions
— All 10 banks operating in Malawi, both locally and internationally,
are connected to the switch
– Out of 305 non-bank financial institutions reported in Malawi, only
the 2 telcos that offer mobile money are connected (MPAMBA, Airtel
Money). Non-bank financial institutions that are not connected to the
switch operate through a major bank or a mobile money network
– While not operating a domestic card scheme and processing international
schemes’ cards, Natswitch does not offer tokenization and does not
enable card e-commerce transactions
— SIMO Rede is a hybrid switch processing Account-to-Account, cards,
and mobile money transactions
– 18 out of 19 local and international banks operating in Mozambique are
connected to the domestic switch. Only 3 non-bank financial institutions
are connected to SIMO Rede. All of them are mobile money networks
of telco operators (M-Pesa - Vodacom, mKesh - Tmcel, e-Mola - Movitel)
– While not operating a domestic card scheme and processing international
schemes’ cards, SIMO Rede does not offer tokenization and does not
enable card e-commerce transactions
– Mozambique is currently in the process of re-implementing a new switch
for the third time, with market rumours pointing to SIMO Rede’s lack
of fit-for-purposeness and operational challenges

2 MMOS CONNECTED TO THE SWITCH: 3 MMOS CONNECTED TO THE SWITCH:

10 BANKS CONNECTED TO THE SWITCH: 18 BANKS CONNECTED TO THE SWITCH:

SADC REGION INDUSTRY REPORT – DECEMBER 2023 30

NAMIBIA’S NAMSWITCH APPEARS TO BE THE MOST ADVANCED NATIONAL FINANCIAL SWITCH (NFS) IS THE RETAIL PAYMENT
DOMESTIC PAYMENT INFRASTRUCTURE AMONGST DEEP DIVE SWITCH FOR ZAMBIA. DESPITE BEING FAIRLY RECENT (2018),
COUNTRIES, BUT IT IS NOT ENABLING TOKENIZATION IT DOES NOT OFFER TOKENIZED E-COMMERCE TRANSACTIONS

Deep Dive - Namibia Deep Dive - Zambia

KEY INFORMATION KEY INFORMATION

Population 2.6 M Population 20.0 M

No. of mobile money operators 0 No. of mobile money operators 3

Share of electronic payments Share of electronic payments

31% 11%
in retail in retail

No. of banks (1) 9 No. of banks (1) 18

No. of non-bank financial No. of non-bank financial

649 124
institutions (2) institutions (2)

Domestic card scheme None Domestic card scheme None

DOMESTIC SWITCH DOMESTIC SWITCH

Connected Connected
Name Namswitch 9 Name NFS 18
Banks Banks

Connected Connected
Launch 2004 0 Launch 2018 6
non-banks non-banks

Transaction Transaction
Ownership Namclear n/a Ownership Zechl ZK61.4 mn
volume volume

Government Transaction Government Transaction

Yes n/a Yes ZK44.6 bn
participation value participation value
Domestic Domestic
transactions of transactions of
Hybrid Switch Yes Yes Hybrid Switch Yes Yes
intern. payment intern. payment
schemes schemes

USE CASES USE CASES

Cash disbursement Card present Cash disbursement Card present

Card present chip & pin P2P (remittances) Card present chip & pin P2P (remittances)

Card present contactless Card not present Card present contactless Card not present

Account-to-Account Tokenization Account-to-Account Tokenization

COMMENT COMMENT

— Namswitch is a hybrid switch processing Account-to-Account, card,
and bank mobile apps transactions
— All 9 authorised banks operating in Namibia are connected to the switch
– There are no mobile money operators present in Namibia and none
of the 649 non-bank financial institutions are connected to Namswitch
– Namswitch does not offer tokenization but enables e-commerce
for a limited number of merchants categories (e.g. education, travel, …)
– Namibia is part of the SADC TCIB project. Namswitch processed
an interlinked test transaction in 2021, but there are no interlinked
transactions reported publicly or in country’s payment statistics
as of October 2023
– National Financial Switch is a hybrid switch processing Account-to-
Account, card, and bank mobile apps transactions
– All 18 authorized banks operating in Zambia are connected to the NFS
– Out of the 124 non-bank financial institutions reported by the central bank
of Zambia (BOZ), 6 are connected to the switch. 3 of them are mobile
money operators (MoMo – MTN Zambia, Airtel Money - Airtel, Zamtel
Mobile Money - Zamtel) and 3 are fintechs (eTUMBA – owned by AB Bank
Zambia, Kazang, Tenga)
– While not operating a domestic card scheme and processing international
schemes’ cards, NFS does not offer tokenization and does not enable card
e-commerce transactions

0 MMOS CONNECTED TO THE SWITCH: 3 MMOS CONNECTED TO THE SWITCH:

NONE

9 BANKS CONNECTED TO THE SWITCH: 18 BANKS CONNECTED TO THE SWITCH:

SADC REGION INDUSTRY REPORT – DECEMBER 2023 31

IN THE SADC REGION ZIMBABWE IS ONE OF THE TWO COUNTRIES
WHICH OFFERS A DOMESTIC CARD. ALTHOUGH IN OPERATION FOR
~30 YEARS, MAJOR KEY PAYMENT INNOVATIONS ARE STILL MISSING

Deep Dive - Zimbabwe

KEY INFORMATION

Population 16.3 M

No. of mobile money operators 2

Share of electronic payments

14%
in retail

No. of banks (1) 21

No. of non-bank financial

187
institutions (2)

Domestic card scheme None

DOMESTIC SWITCH

Connected
Name Zimswitch 19
Banks

Connected
Launch 1994 6
non-banks

Transaction
Ownership Zimswitch n/a
volume

Government Transaction
Yes (60%) n/a
participation value
Domestic
transactions of
Hybrid Switch Yes Yes
intern. payment
schemes

USE CASES

Cash disbursement Card present

Card present chip & pin P2P (remittances)

Card present contactless Card not present

Account-to-Account Tokenization

COMMENT

– 19 out of 21 banks authorised by the central bank of Zimbabwe (RBZ) are

connected to the domestic switch
– 6 non-bank financial institutions are connected to the switch. 2 of them
are mobile money operators (Ecocash - Econet, OneMoney - Netone),
2 are building societies (FBC, NBS) and 2 are fintechs (Ice Cash, O’Mari)
– In the SADC region Zimbabwe is one of the two only countries with a
domestic card scheme
– Although Zimswitch has been in operation ~30 years, key innovations like
tokenization and card e-commerce transactions are still missing
– Zimbabwe is part of the SADC TCIB project. Zimswitch was part of an
interlinked test transaction in 2021, but there are no interlinked transactions
reported publicly or in the country’s payment statistics as of Oct 2023

2 MMOS CONNECTED TO THE SWITCH:

19 BANKS CONNECTED TO THE SWITCH:

Source: Arkwright Analysis, GlobalData, regional central banks, press

releases. Notes: (1) Including local and international banks with
branch in the respective country. (2) Non-bank financial institutions
include: exchange offices, non-bank credit institutions, financial
leasing institutions, payment service providers, insurance companies,
micro finance companies.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 32

APPENDIX C
FIG. 12’s TIMELINE ISSUES AND RELATED SOURCES

CATEGORY TOPIC YEAR SOURCE

MALAWI
Rules and regulations Criticism from banks 2013 https://mwnation.com/national-switch-a-long-overdue-project-or-a-waste/

Infrastructure System failures 2016 https://mwnation.com/bam-assures-end-to-nat-switch-challenges/

https://www.nyasatimes.com/malawi-banks-defying-nat-switch-rules-company-eyes-visa-mobile-money-op-
Rules and regulations Criticism 2016
erators/
Infrastructure issues due to resistance
Availability 2016 https://www.businessmalawi.com/natswitch-needs-to-improve-says-nbm/
from banks
https://www.nyasatimes.com/malawi-banks-defying-nat-switch-rules-company-eyes-visa-mobile-money-op-
Availability Functionality issues 2017
erators/

Availability Long processing times 2021 https://www.ifc.org/content/dam/ifc/doc/mgrt/malawi-building-resilience-through-dfs.pdf

MOZAMBIQUE
Dependency on SIMO Rede blackmailed from software https://clubofmozambique.com/news/portuguese-software-provider-blackmailing-mozambique-watch/
2018
professional players provider Bizfirst https://allafrica.com/stories/201811190184.html

Availability Outage of SIMO network 2018 https://www.facebook.com/radiomoc/posts/2290405001004407/?locale=pl_PL

https://clubofmozambique.com/news/mozambique-new-atm-blackout-simo-network-system-unconfig-
ured-in-technical-error-carta-141892/
Availability ATM and POS blackout 2019
https://clubofmozambique.com/news/breaking-electronic-banking-blackout-is-over-simo-system-successful-
ly-repaired-mozambique-141912/
https://www.publico.pt/2018/11/16/economia/noticia/falha-rede-simo-causa-caos-mocambique-1851409
Availability SIMO blackout 2020 https://www.dw.com/pt-002/crise-simo-e-apag%C3%A3o-banc%C3%A1rio-em-mo%C3%A7ambique-passo-
maior-que-a-perna/a-46365923
Rules Failure of SIMO’s electronic payments https://cartamz.com/index.php/empresas-marcas-e-pessoas/item/6883-falhas-na-rede-simo-tem-a-ver-com-
2020
and Regulations network gestao-deficiente-especialistas

NAMIBIA
https://www.facebook.com/standardbankna/posts/your-internet-banking-complaints-have-been-acknowledge-
Infrastructure Nationwide internet banking outages 2014
dour-team-investigated-and/360307990801044/
https://www.facebook.com/FNBNam/posts/please-note-that-due-to-technical-issues-at-namclear-all-bank-
Availability Technical issues at Namclear 2021
cards-may-currentl/3674163056008284/
IT-rollout-related challenges of https://www.sadcbankers.org/subcommittees/PaySystem/media/Documents/Newsletters/Vulindlela_
Availability 2021
Namswitch Oct2010/Namibia_article.pdf
https://www.bon.com.na/CMSTemplates/Bon/Files/bon.com.na/ba/ba54d84b-c8f5-4014-a4c5-87ec-
Fraud Increase in fraud cases since 2021 2023
cc650e2e.pdf

ZAMBIA
Zambia is proven to struggle developing
Fraud 2019 https://cenfri.org/wp-content/uploads/Zambia-payments-diagnostic_Cenfri_BankServAfrica.pdf
digital financial systems
ZIPPS availability level goes down due
Availability 2022 https://www.boz.zm/Bank_of_Zambia_2022_Annual_Report.pdf
to technical challenges
National Payment System faces techni-
Availability 2022 https://www.boz.zm/2022NationalPaymentsSystemsAnnualReport_FINAL.pdf
cal and cybersecurity risks
Management and organisation of
Rules https://www.zechl.co.zm/wp-content/uploads/2023/08/Disclosure-Report-For-ZECHLs-Self-Assmt-Against-
national clearing house needs improve- 2023
and Regulations PFMI-24-August-2023-Final.pdf
ment

ZIMBABWE
Availability Outage at POS terminals 2008 https://allafrica.com/stories/200807150158.html

Availability Outage of Zimswitch system 2017 https://www.techzim.co.zw/2017/09/zimswitch-goes-down-for-3-hours-today-business-comes-to-a-standstill/

https://itweb.africa/content/KBpdgvpz2PAMLEew
Dependency on Ecocash initially refused to join
2017 https://www.techzim.co.zw/2020/07/killing-monopoly-by-creating-a-bigger-monopoly-zimswitch-as-nation-
professional players Zimswitch network
al-switch/

Availability Errors at POS terminals 2020 https://www.tzperspective.com/our-banks-are-failing-us-and-it-needs-to-end/

Availability Security issues of merchant payments 2020 https://zimswitch1.rssing.com/chan-45612239/all_p5.html

Innovation
Lack of innovation 2021 https://www.techzim.co.zw/2021/06/ecocashs-zimswitch-services-including-bank-to-wallet-are-down/
and Competition

SADC REGION INDUSTRY REPORT – DECEMBER 2023 33

ABOUT ARKWRIGHT

WE BELIEVE Arkwright is a management consulting firm offering strategy advi-

IN PRAGMATISM, sory services to private corporations, NGOs, investors and start-up
companies. Amongst a number of different industry-dedicated
METICULOUSNESS
teams, our Digital, Payments, and Digital Banking practice is one of
AND DEEP the most experienced globally, positioning Arkwright as a high-end
KNOWLEDGE OF digital financial services and payments specialist strategy boutique.
THE INDUSTRIES
IN WHICH WE With clients that include major financial institutions, central banks,
OPERATE technology providers and institutional investors as well as internet
market places and media organisations, Arkwright has hands-on
experience in leading and supporting the development of digital strat-
egies and digital transformation.

Our knowledge of global cases and best practices, proprietary

ideation methodologies and the hands-on experience of our manage-
ment consultants and industry experts is able to support throughout
the strategy and implementation phases.

We believe in pragmatism, meticulousness and deep knowledge of

the industries in which we operate. At the heart of our mission is the
AUTHORS
development and implementation of enduring performance improve-
ments and growth strategies, in partnership with our clients.

When we founded Arkwright in 1987, we did so with a strong belief

that clients’ sustained success requires deeper collaboration and a
different working model than what we experienced at the time. Since
then, our focus on deep-rooted, long-term partnerships with selective
Francesco Burelli Peter Großkurth clients has formed the basis of our approach and helped us grow to
Partner Senior Associate what we are today: an international consultancy with Nordic roots,
— — operating truly globally, from our offices in Hamburg, Oslo, Stock-
holm, and London, and with additional operational presence based in
the Middle East and the US.

Lena Büttner Siu-Liang Hor

Associate Associate
— —

SADC REGION INDUSTRY REPORT – DECEMBER 2023 35

This report is based on the analysis of publicly available information
at the time of writing. The information therein was correct
to the best of the authors' knowledge and illustrates Arkwright’s
interpretations and working hypothesis at the time of publication.
The report is not intended to be used within investment
or management decisions and Arkwright accepts no related
liability or responsibility. The brands and business models
mentioned in the report are property of their respective companies.

Arkwright © 2023 — All rights reserved.

SADC REGION INDUSTRY REPORT – DECEMBER 2023 36