ADDIS ABABA – AfCFTA together with African Union and Afreximbank launched a Pan-African Payment and Settlement System (PAPSS) in a bid to facilitate an efficient and secure flow of money across African borders.
Its developer, African Export-Import Bank (Afreximbank) said the system would facilitate payment, clearing and settlement for cross-border trade across Africa, saving the continent at least $5 billion annually in payment transaction costs.
“PAPSS provides 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,” Prof. Benedict Oramah, President of Afreximbank, at the commercial launch of PAPSS in Ghana on Thursday.
The bank is the main Settlement Agent for PAPSS and provides settlement guarantees on the payment system and overdraft facilities to all settlement agents, in partnership with Africa’s participating Central Banks.
“This launch is a result of many months of hard work, resolve and commitment towards achieving set objectives for the growth of the continent in trade,” said Nana Akufo-Addo, president of Ghana, after complimented Afreximbank and AfCFTA Secretariat for the establishment of the payment system.
“All Central Banks in Africa must now join up and ensure seamless transfer of funds deploying this most practical and important African solution to an African problem,” added President Akufo-Addo.
Prior to PAPSS, over 80% of African cross-border payment transactions originating from African banks had to be routed offshore for clearing and settlement using international banking relationships.
That posed multiple challenges, ranging from payment delays to operational inefficiencies and compliance concerns for the disparate regional payment systems.
PAPSS now provides the solution to the disconnected and fragmented nature of payment and settlement systems that have long impeded intra-African trade, according to Afreximbank.
Its officials said the payment system has already been successfully piloted in the six countries of the West African Monetary Zone.
The outcomes show it has delivered multiple advantages and efficiencies to intra-African trade payments, according to its developers.
These advantages include reducing the cost, duration and time variability of cross-border payments; decreasing the liquidity requirements of commercial banks for payments; and strengthening oversight of cross-border payment systems by central banks.
The commercial launch of the Pan-African Payment & Settlement System (PAPSS) has officially began in Accra, Ghana