Africa’s new cross-border payment system, Pan-African Payments and Settlement System (PAPSS), was launched Thursday in Ghana by the Afreximbank in partnership with the African Continental Free Trade Area (AfCFTA) Secretariat.
The platform will facilitate instant cross-border payments in local currencies between countries minimizing risk and contributing to financial integration across the regions.
“The commercial roll-out of the PAPSS…is, therefore, timely and set to boost intra-Africa trade significantly by making cross-border payments less reliant on third currencies, and is set to save the continent up to US$5 billion dollars annually, which is the amount currency convertibility costs Africa,” Wamkele Mene, Secretary-General, AfCFTA Secretariat disclosed.
“With the implementation of AfCFTA, we shall see an increase in trade transactions in Africa. This development will, in turn, create the greater demand for cost-effective payment services, underpinning the important nexus between PAPSS and implementation of AfCFTA,” he added.
“Globally, a functioning payment infrastructure underpins international trade. An efficient payment system unifies fragmented markets & supports other trade services such as trade finance,” Prof. Benedict Oramah, President of Afreximbank said during the launch.
Ghanaian Vice President Mahamudu Bawumia said the PAPSS would help drive the intra-African trade to stimulate industrialization and promote sustainable and inclusive economic growth in Africa.
“This is an African solution for an African problem. It is the most practical and most important achievement in payment system integration on the continent since independence from colonial rule. This is the closest we have come as a continent towards the vision of issuing a common currency,” he added.
The benefits of PAPPS for cross-border payments include 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.
PAPSS was piloted in the six countries that make up the West African Monetary Zone (WAMZ)— Nigeria, the Gambia, Sierra Leone, Liberia, Ghana and Guinea.