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African Export-Import Bank (Afreximbank) and AfCFTA Secretariat has 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. 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 (AfCFTA).
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.
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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).
The commissioning of PAPSS follows a successful pilot phase in the countries of the West African Monetary Zone (WAMZ), with live transactions done in an instant. The West Africa Monetary Institute (WAMI) collaborated with Afreximbank in launching the system in the WAMZ. This 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. Afreximbank provides settlement guarantees on the payment system and overdraft facilities to all settlement agents. To accelerate expansion and ensure settlement finality, Afreximbank has approved US$500 million to support the clearing and settlement in West African Monetary Zone (WAMZ) countries. It is estimated that a further US$3 billion will be made available to support the systems continent-wide implementation.
“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,” said Professor Benedict Oramah, President of Afreximbank and Chairman person of PAPSS Management Board.
“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,” said Godwin Emefiele, Governor Nigerian Central Bank.
