Afreximbank, AfCFTA roll out payment, settlement system
African Export-Import Bank and AfCFTA Secretariat have announced the operational roll-out of the Pan-African Payment and Settlement System.
PAPSS was described in a statement on Wednesday as a revolutionary financial market infrastructure to enable instant, cross-border payments in local currencies between African markets.
According to the statement, by simplifying cross-border transactions and reducing the dependency on hard currencies for these transactions, PAPSS is set to boost intra-African trade significantly and underpin the implementation of the African Continental Free Trade Area.
It said the system would 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 $5 billion in payment transaction costs each year,” the statement said.
The commissioning of PAPSS followed a successful pilot phase in the countries of the West African Monetary Zone, with live transactions done in an instant, it added.
The statement said to accelerate expansion and ensure settlement finality, Afreximbank has approved $500 million to support the clearing and settlement in WAMZ countries.
“It is estimated that a further U$3 billion will be made available to support the systems continent-wide implementation,” it said.
The President, Afreximbank and Chairman, PAPSS Management Board, Prof. Benedict Oramah, 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.”
The Secretary-General, AfCFTA, Wamkele Mene, said the implementation of the agreement establishing the AfCFTA would improve intra-Africa trade, necessitating in this regard, the establishment of a payment system to facilitate affordable and efficient cross border trade transactions.
He said, “It is on this basis that the AfCFTA Secretariat strongly supports the development of a Pan African Payment and Settlement System 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.”
PAPSS was launched on July 7, 2019 in Niamey, Niger, at the 12th Extraordinary Summit of the Assembly of the African Union who adopted it as a key instrument for the implementation of the AfCFTA.