A new system went live with 12 banks in Africa to enable payment transactions and alleviate trade issues across the continent, which deals in more than 40 currencies, according to reports.
The Africa Export-Import Bank (Afreximbank) launched the Pan-African Payment and Settlement System (PAPSS), in collaboration with African Union (AU) and African Continental Free Trade Area (AfCFTA). It’s is expected to boost cross-border transactions across Africa, governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, said at virtual event Connecting Payments, Accelerating Africa’s Trade, held in Accra, Ghana.
Emefiele said that the new PAPSS platform would assist households, businesses and financial institutions working across the continent. He also said the launch is a milestone regarding the build-out of the pan-African infrastructure to improve the payment gateway across West Africa.
“For example, businesses can be assured of an efficient and reliable payment gateway that supports the instant flow of funds and relatively the use of safe payment channels that usually comes at a high cost to households and businesses,” Emefiele said.
“Prior to the launch of PAPSS, settlements for intra-Africa trade required a third currency and a non-African correspondent bank. This resulted in an estimated loss of close to $5 billion annually and undermined trade in Africa countries,” he added.
The system is anticipated to save African businesses about $5 billion in the yearly cost of transactions. PAPSS is also expected to advance growth in intra-African trade via the AfCFTA’s creation of a single market throughout the continent.
PAPSS was successfully piloted in the six-member West African Monetary Zone. The new approach enables a customer in one African country to pay in their own currency, while a seller in another country receives payment in their own currency.
“We are eager to build upon the African Continental Free Trade Area’s creation of a single market throughout Africa,” said Afreximbank President and Chairman Benedict Oramah at the launch event.
“PAPSS provides the state-of-the-art financial market infrastructure connecting African markets to each other, thereby enabling instant cross-border payments in respective local African currencies for cross-border trade,” Oramah added.