Zim joins local currency payment platform

BUSINESS REPORTER

Zimbabwe has signed up to the local currency payment and settlement platform which is billed to save Africa US$5bn annually in transaction costs on cross border payments,

The platform, the Pan African Payment and Settlement System (PAPSS), was developed by Afreximbank, which acts as the main Settlement Agent in partnership with participating African Central banks.

Reserve Bank of Zimbabwe governor John Mangudya said Zimbabwe signed up to the PAPSS agreement in March 2022.

“As this is a payment system for cross-border transactions, banks will be advised of their role as they handle most of the payments,” Mangudya said.

The commercial launch of PAPSS was done last year after it was successfully piloted in six countries that make up the West African Monetary Zone (WAMZ) — Nigeria, the Gambia, Sierra Leone, Liberia, Ghana and Guinea.

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 the PAPSS, payment will be completed within two minutes.

PAPSS is an enabler in driving intra-African trade under the African Continental Free Trade Area (AfCFTA), the largest trading bloc by member countries after the World Trade Organisation. AfCFTA seeks to bring together all 55 member states of the African Union, covering a market of more than 1.2 billion and a combined GDP of over US$3 trillion.