By Nasratu Kargbo
President Julius Maada Bio has expressed optimism that the introduction of the National Payment Switch by the Bank of Sierra Leone will reduce the level of corruption in the country’s revenue collection.
Speaking at the launch of the payment switch, on the 3rd May 2023, he noted it is no secret in the country and the sub-region that the lower the level of human interaction with money, the less likely for revenue collectors to be corrupt.
He stated that the system will reduce human intervention in revenue collection and improve data collection, as it is more efficient and cost-effective in revenue or tax collection.
He said with data, government agencies such as National Revenue Authority (NRA) will spend less time and money in accessing and collecting taxes.
Highlighting other ways in which the switch will be relevant, President Bio stated that social welfare payments such as pensions and welfare benefits will now be disbursed directly into the accounts of beneficiaries through the national switch, stressing it ensures timely and secured delivery.
He said people in rural areas where there’s no bank or physical financial service structure can now have access to financial services, and that residents in rural areas will be able to transact using electronic payment or other digital financial tools without going through so much hassle of traveling to bigger towns to access financial services.
The President added that with the switch, there will be a rapid flow of millions of financial transactions within and across the country in a second. He added that the country is moving away from being cash-based to cashless, stating that there has been a lot of cash hoarding in the informal and formal sectors, in rural communities, as well as in unbanked and under-banked populations.
He stated that the new system will facilitate interconnection and interoperability among various actors in the financial landscape, such as commercial banks, microfinance institutions, and mobile money operators amongst others.
President Bio added that the switch will bridge the gap in persistent barriers, to building an inclusive and diverse economy, stressing that the challenge has been surmounted and that technology has aided to advance inclusive economic growth agenda.
He said turning on the national switch is an immense achievement in the country’s internal financial sector that links the country with the rest of the world.
In his statement, the Minister of Finance Sheku F. Bangura said the switch will increase transparency, and accountability and support their effort to reduce leakages in the nation’s system, which includes revenue collection by NRA.
He explained that the system will provide a platform for government to facilitate service delivery, stating that it will enhance the way they do payment for different sectors. “It will ensure that accountability remains an integral part of our society,’’ he said.
Bangura added that introducing the payment switch is a way of rebranding the country’s financial infrastructure and keeping abreast with the fast global technology transformation, and working towards shaping the nation’s financial system from being predominantly cash based, to a digital economy.
World Bank Representative Lydia Mesfin said the country has one of the lowest financial inclusion indexes in the continent saying the 2021 global index data indicates that only 29% of the country’s population has an account with formal financial institutions.
She said it is expected that the switch will increase the efficiency of the financial system, which in turn will increase the usage of transactions and increase account ownership amongst others.
Mesfin noted that the financial inclusion project which is financed by the World Bank is very significant to the nation’s financial inclusion agenda, stating that it has the potential to contribute to revenue generation and GDP.
The Acting Bank Governor Ibrahim L. Stevens said with the payment switch, interoperability will increase financial inclusion and ensure Sierra Leone’s record of low-level financial inclusion will be a thing of the past.
Stevens on 19th April 2023 explained that the switch has three phases, the first which is the use of Automated Teller Machines (ATMs) and Point of Sales (POS) interoperability. Citing an example of how the system will operate, Stevens said if someone has a card in a bank that is a member of the Switch; they can also use that card to transact with another bank that is also a member of the Switch.
He said the second phase has to do with instant payment interoperability for mobile money operators, explaining that under such a system, a person registered with Orange Money can send money to another person with Afri-Money, without going through stress.
The Acting Governor said phase three of the project will be geared towards opening up the international gateway as someone can use their payment card issued in Sierra Leone, internationally, but was quick to note that it has not been done in an integrated format yet.
Six commercial banks are presently connected to the switch, with others to connect soon. The Project was sponsored by the World Bank.
Copyright © 2023 Politico (05/05/23)
