African Export-Import Bank (Afreximbank) in collaboration with AfCFTA Secretariat today announced the operational roll-out of the Pan-African Payment and Settlement System (PAPSS), a revolutionary Financial Market Infrastructure to enable instant, cross-border payments in local currencies between African markets.
This move will boost intra-African trade significantly and underpin the implementation of the African Continental Free Trade Area (AfCFTA) by simplifying cross-border transactions and reducing the dependency on hard currencies for these transactions.
PAPSS will serve as a continent-wide platform for the processing, clearing, and settling of intra-African trade and commerce payments, leveraging a multilateral net settlement system. Its full implementation is expected to save the continent more than US$5 billion in payment transaction costs each year.
The development of a pan-African payments infrastructure has been made possible by some of the continent’s leading institutions. The platform has been developed by Afreximbank, who also acts as the main Settlement Agent in partnership with participating African Central banks. The implementation of the infrastructure is taking place in collaboration with the African Continental Free Trade Area (AfCFTA) Secretariat with the endorsement of the African Union (AU).
Following a successful pilot phase in the countries of the West African Monetary Zone (WAMZ), the PAPPSS was commissioned with live transactions done in an instant. The West Africa Monetary Institute (WAMI) collaborated with Afreximbank in launching the system in the WAMZ. This is an important milestone for the continent and PAPSS is now engaged in advanced discussions with other national and regional institutions to rapidly expand continent-wide connectivity.
Professor Benedict Oramah, President of Afreximbank and Chairman person of PAPSS Management Board, said: “With the implementation of PAPSS, Africa can expect to begin to reap the fruits of the African Continental Free Trade Agreement. Afreximbank is proud to have contributed in the realization of the multi-decade dream that seemed unachievable just a few years ago.
“PAPSS is not positioned to replace existing regional and national payment systems but to collaborate and work with them in better integrating African economies for the benefit of all. We thank the African Union, the AfCFTA Secretariat, the West African Monetary Institute, and African Central banks for a remarkable outcome.”
H.E Wamkele Mene, Secretary-General of the African Continental Free Trade Area, said: “The implementation of the Agreement establishing the AfCFTA will improve intra-Africa trade, necessitating in this regard, the establishment of a payment system to facilitate affordable and efficient cross border trade transactions. It is on this basis that the AfCFTA Secretariat strongly supports the development of a Pan African Payment and Settlement System (PAPSS) that will usher in a new phase in the African economic trajectory.
“The introduction of PAPSS provides Africa with greater capacity to conduct cross-border transactions and expand the scale of both active and latent opportunities for enhanced intra-African trade.”
Godwin Emefiele, Governor Nigerian Central Bank, said: “PAPSS has been brought about by our collective desire to facilitate and accelerate the growth of intra-African trade. With central banks working actively together alongside the Afreximbank, we are ushering in a new phase in Africa’s economic trajectory, in keeping with the ideals of the African Continental Free Trade Area.
“The introduction of PAPSS provides central banks with greater transparency and control as we now have a single window into all cross-border transactions emanating from our various jurisdictions and across the continent.”
Mike Ogbalu III, CEO of PAPSS said: “PAPSS is designed to be a fundamental rail connecting African markets to each other and enabling individuals, businesses, and governments on the continent to trade with each other seamlessly. PAPSS will provide fresh impetus for businesses to scale more easily across Africa, essentially eliminating the borders that have balkanized us and robbed us of our economic prosperity for so long.
“PAPSS has demonstrated credibility through its successful pilot and proof of concept in the WAMZ region, a region with the diversity and complexity anticipated in the larger African context (multi-lingual, multi-currency, multi-regulator, etc).
“Following the accomplishment of this milestone, PAPSS will now set its sights on integrating the rest of the continent into this critical infrastructure by integrating National Payment Systems, Regional Payment Systems, and other financial services providers.”
