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Oliver Kazunga, Senior Business Reporter
AFREXIMBANK and the African Continental Free Trade Area (AfCTA) secretariat have announced the operational roll-out of the Pan-African Payment and Settlement System (PAPSS) , which seeks to enable instant cross-border payments in local currencies within African markets.

In a statement, AfreximBank said full implementation of the PAPSS is expected to save the continent more than US$5 billion in payment transaction costs per year

“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.

“Full implementation of the Pan-African Payment and Settlement System (PAPSS) is expected to save the continent more than US$5 billion in payment transaction costs each year,” it said.

It said 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, which 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 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,” said AfreximBank.

The regional financier 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 WAMZ countries.

It is estimated that a further US$3 billion will be made available to support the systems continent-wide implementation.

AfreximBank president Professor Benedict Oramah, who is also chairperson of PAPSS management board 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 realisation 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.”

AfCTA secretary-general Wamkele Mene said the implementation of the agreement establishing the AfCFTA will improve intra-Africa trade, necessitating the establishment of a payment system to facilitate affordable and efficient cross border trade transactions.

“It is on this basis that the AfCFTA secretariat strongly supports the development of a PAPSS 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,” he said. – @okazunga.