..to pull their efforts in support of their regional integration goals

BY CENTRAL BANK REPORTER

EZULWINI – The Common Market for Eastern and Southern Africa (COMESA), working with all their member states, looks poised towards creating a secure and efficient financial environment that supports its regional integration goals.

In the past week, the Committee of Governors of Central Banks, under COMESA engaged in a five-day meeting, which encompassed an array of discussions that were of interest to the regional body.

The meeting was hosted by the Central Bank of Eswatini (CBE) by virtue of being Chairperson of the Committee of Governors.

Dr Phil Mnisi, the CBE Governor, welcomed the about 60 delegates to Eswatini and challenged them to engage in discussions that will improve the overall agenda and goals of COMESA. 

When officially opening the Meeting of the Experts of the Bureau of the COMESA Committee of Governors of Central Banks last Monday, Dr. Mnisi said the gathering was to reaffirm their commitment to the COMESA regional integration agenda, which is crucial in fostering economic growth and stability across COMESA member states, and one of the key pillars in achieving this is through financial and monetary cooperation.

He noted that Central banks played a crucial role in this integration process. “Economic convergence, policy coordination, and central bank independence are topical issues that are already receiving our attention in our various countries as part of the goals towards a Monetary Union. As Central Banks, we have our work cutting across inflation control, fiscal discipline and debt management among others, in ensuring that we have sound monetary and fiscal policies,” the Governor said.

He added, “We have our institution, the COMESA Monetary Institute, whose overall objective is to undertake all the technical, policy, statistical, institutional and legal preparatory work. The ultimate goal is that this work culminates in the COMESA Monetary Union. The institution has been carrying demand-driven capacity building for Central Banks, research activities, and workshops for the improvement of macroeconomic management and financial system stability.”

. . . COMESA Central Banks challenged to mitigate cybersecurity risks

EZULWINI – Central Banks within the Common Market for Eastern and Southern Africa (COMESA) have been challenged to employ strategic responses to cybersecurity threats.

Chief Information Security and Risk Officer of the Ghana Association of Bankers Audrey Mnisi spelled out the need to enhance cybersecurity frameworks by developing regional cybersecurity standards, establishing information sharing mechanisms, build cyber resilience through continuous monitoring and testing, for instance, establishing a COMESA Cyber Threat Intelligence Center, and a harmonized regulatory framework for fintech and digital banking.

“Another intervention would be to strengthen digital capabilities by upskilling central bank staff, investing in advanced data analytics, and modernizing IT infrastructure. The COMESA Central Banks could also look into collaborative approaches which may include regional coordination on digital banking policies as well as public-private partnerships for cybersecurity,” she said.

Mnisi then unpacked the notable cyberattacks on Central Banks, including the Central Bank of Gambia, which suffered a significant data breach in 2022, with two terabytes of data stolen. She also reported that the Bank of Zambia experienced a hit in 2022, disrupting its Bureau de Change Monitoring System and website, urging stakeholders in the financial sector to be extra vigilant as these incidents may not have been in isolation.

Despite these attacks, Mnisi noted that there were lessons to be learned. 

“Some attacks have shown evidence of international cybercriminal networks targeting African banks. Also, many experts believe that cyber-attacks are significantly underreported due to reputational concerns and less stringent disclosure requirements. This means there is an urgent need for cybersecurity skill development in the African banking sector,” she said.

With the advent of financial inclusion in the face of security risks, Mnisi asserted that banks faced the challenge of rapidly expanding digital services for financial inclusion while ensuring robust security, adding that often times banks found themselves sacrificing security in their efforts to expand services.

IN THEIR OWN WORDS:

Governor of the Reserve Bank of Zimbabwe – Dr John Mushayavanhu -CBE9

“We have seen the introduction of Fintechs in our countries. Our role as Central Banks is to regulate and ensure products are rolled out in a safe environment that meets all the security requirements. As such, we need to set minimum standards because any vulnerability that may occur will be quite detrimental to operations. Also, we cannot regulate what we do not know, hence skills development is key in our sector.”

Deputy Governor of the Central Bank of Eswatini (CBE) Felicia Dlamini-Kunene – CBE13

“Central Banks across the globe are confronted by a multitude of challenges, which call for us to discuss and collectively find solutions. We also need to learn from each other, share experiences, and chart an integration spirit. The two thematic themes of the symposium ‘Digital Banking and the Impact of Cyber Security and Other Emerging Risks to Central Banks in the COMESA Region’ and ‘The Era of Using Big Data and Machine Learning in Central Banks and Financial Institutions: Implications for Monetary Policy’ are quite relevant to these challenges faced by Central Banks.”

Chief Information Security and Risk Officer of the Ghana Association of Bankers Audrey Mnisi -CBE19

“Cybersecurity threats have a huge impact on Central Banks. It causes disruptions in systems, hence the importance of ensuring that information technology staff is brought up to speed and well-skilled. Central Banks need to know what is happening within their space. You need to develop standards but do not work in silos. Cybercriminals share information within themselves, we also need to engage in that practice.”

Deputy Governor of the Bank of Zambia Dr. Francis Chipimo- CBE291

“One thing is clear, we need to get our basics right from a technical perspective. Often, we are attracted to the latest developments but what platforms do they sit on? While we continue to embrace innovation and the use of Artificial Intelligence (AI), we must think and engage on its impact on our policies.”

Director Banking & Payment Services- Central Bank of Kenya Michael Eganza -CBE28

“Our banking space in Kenya is 90 percent digitally initiated, with significant growth on Mobile Money platforms. This tells us that we have a digital transformation economy, which comes with a lot of benefits, in particular financial inclusion. We also realized that we need to link our payment systems. As Central Banks, we need to see how we use these platforms to drive efficiency.”

. . . COMESA continues to support negotiations in key service sectors-CBE26

EZULWINI – As part of COMESA’s broader strategy to enhance economic integration and inclusivity in the region, the regional body has been working on trade facilitation instruments to overcome barriers and accelerate intra-regional trade and investments. 

COMESA Secretary General Chileshe Mpundu Kapwepwe said this groundwork has perched COMESA’s continuous efforts to support negotiations in key service sectors, including business, financial, transport, communications, tourism, construction, and energy services, among others.

“As a result, I am delighted to note that COMESA has made significant strides in regional integration and trade facilitation. Intra-COMESA trade has grown tremendously from just $1.5 billion in 2000 to $14 billion in 2023. Despite these gains, intra-COMESA trade remains a relatively modest 7% of the region’s total trade and a much smaller portion relative to what the regions trades with the outside world,” she said.

She informed the delegates that as they celebrated achievements, they must also acknowledge the challenges.

“The geopolitical tensions that have emerged in various parts of the world, adverse climate events, and a cost-of-living crisis among others, pose significant risks to our economies and our integration efforts. These shocks are putting considerable strain on the regional economies and the world alike in the form of persistent disruption in global supply chains and increased inflation, increased volatility in global financial markets, and tightening global financing conditions. This has put considerable pressure on exchange rates in developing countries, which in turn has heightened debt vulnerability and increased domestic inflation. We must remain vigilant and proactive in addressing these challenges, bolster our togetherness as a region, and find solutions that work for us,” she said.

. . . Big Data, machine learning- tools that can transform financial system

EZULWINI – The rapid advancements in technology have opened up a wealth of possibilities for gathering, analyzing, and utilizing data.

Ever heard of Big Data and Machine learning? 

Big Data refers to extremely large and complex datasets that are too big to be processed using traditional data processing tools. These datasets can come from various sources, including social media, sensors, transactions, the Internet of Things. Machine Learning, on the other hand, is the process of using mathematical models of data to help a computer learn without direct instruction. It is considered a subset of artificial intelligence (AI).

Minister of Finance, Neal Rijkenberg noted that Big Data was now allowing humans to collect vast amounts of information—from transaction records to social media sentiments. 

“It is enabling us to capture the economic realities of our time in real-time. Meanwhile, machine learning algorithms empower us to extract insights from these datasets, identify patterns, and make predictions about future economic conditions with greater accuracy than ever before. Central banks have been presented with possibilities to use big data and machine learning to analyze millions of data points to anticipate economic trends, understand the behavior of inflation, and dynamically adjust monetary policy to optimize economic stability and growth,” he said.