Promoters of the pan African local currency settlement system will give a progress report at next month’s meeting of African leaders to garner political will for central banks and financial institutions to onboard on the platform, AfCFTA Secretariat secretary general Wamkele Mene has said.
The Pan African Payment and Settlement System (PAPSS), which is set to save Africa US$5bn annually in transaction costs, was developed by Afreximbank and anchor the thrust to drive intra-African trade.
The Cairo headquartered bank acts as the main Settlement Agent in partnership with participating African Central banks.
Mene said the AfCFTA Secretariat will continue to strongly support Afreximbank, as PAPPS is being rolled-out to the rest of the Member States of the AU in order to reduce the cost of cross-border payments and to boost intra-Africa trade.
“In this regard, myself and Professor Oramah [Afreximbank president Benedict] will provide a progress report to the Assembly of Heads of States and Government when they convene for their summit on 5 to 6 February 2022. This should provide political impetus to ensure that all Members of the AU switch onto PAPPS,” Mene said.
“After Afreximbank and the AfCFTA Secretariat have provided the Heads of States with a progress report on PAPSS when they convene next month, it is our intention that the platform will be rapidly rolled out across the entire continent for the benefit of SMEs, young entrepreneurs and Africa’s small traders.”
The implementation of PAPSS is taking place in collaboration with the AfCFTA Secretariat with the endorsement of the African Union.
The platform was piloted successfully in in six countries that make up the West African Monetary Zone—Nigeria, The Gambia, Sierra Leone, Guinea, Liberia and Ghana.
The PAPSS is expected to integrate the disparate payment systems across the 55 countries on the continent, improve payment flows and reduce transaction costs would become central to the growth of intra-African trade.
There are 42 national currencies on the continent and access to hard currencies required to transact across borders is limited and intra-regional payments take 2 to 14 days to complete. Under PAPSS, payments will be settled under two minutes.