Experts believe that the launching of Africa’s Pan-African Payment and Settlement System, PAPSS, will improve intra-African trading and reduce reliance on hard currencies for transactions.
This payment system was introduced by the African Export and Import Bank (Afreximbank) and partnered with the West African Monetary Institute (WAMI). The process enables buyers in the African nations to pay in their currency, while a merchant in another country receives payment in their currency.
According to Prudence Sebahizi, African Continental Free Trade Area (AfCFTA) Secretariat’s Chief Technical Advisor, it will benefit traders to pay in their currency while the vendors receive payment in their currency.
The payment system ensures compliance, legality, and penalties. It also reduces transaction time, thereby solving the time factor that impedes intra-African e-commerce, services, and trade growth.
Benedict Oramah, president and chairman of the Board of Directors, Afreximbank, says, “With the implementation of Africa’s PAPSS, Africans can expect to begin to reap the fruits of the AfCFTA agreement. Afreximbank is proud to have contributed to the realisation of the multi-decade dream that seemed unachievable just a few years ago”.
Also commenting on the development, Godwin Emefiele, Governor of the Central Bank of Nigeria, the PAPSS will streamline cross-border transactions and minimise third currencies in intra-African commerce. For cross-border transactions in Africa, the third currencies are dollars, pounds, and euros.
According to Mike Ogbalu III, Chief Executive Officer of PAPSS, “The commercial launch marks a significant milestone in connecting African markets seamlessly. It will provide a fresh impetus for businesses to scale more easily across Africa and is likely to save the continent more than $5 billion in transaction costs every year.”
PAPSS – Pan-African Payment and Settlement System
PAPSS is an intra-African trade and commerce payment and settlement system that is centralised. This would accelerate payments and formalise trade. The advantages of Africa’s PAPPS for cross-border payments are the following: cost reduction; reduction in duration and time variability; decreasing liquidity requirements of commercial banks; decreasing liquidity requirements of central banks for settlement as well as its own payments; and strengthening Central Banks’ oversight of cross border payment systems.