African Export-Import Bank (Afreximbank) has launched the pan-African payment and settlement system (PAPSS), a financial market infrastructure, to enable cross-border payments in local currencies across different markets in the continent.
In a statement on Tuesday, Afreximbank said PAPSS will underpin the implementation of the African Continental Free Trade Area (AfCFTA), and it was developed by the bank in collaboration with the AfCFTA secretariat and central banks in the continent.
The bank said the platform will serve as a continent-wide platform for processing, clearing and settling of intra-African trade and commerce payments.
According to the statement, PAPPS is expected to save the continent more than $5 billion in payment transaction costs annually.
In order to accelerate the expansion of the platform, the bank has approved $500 million to support the clearing and settlement in West African Monetary Zone (WAMZ) countries, and an additional $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,” Benedict Oramah, Afreximbank president, said.
“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”.
Wamkele Mene, AfCFTA secretary-general, said: “The implementation of the Agreement establishing the AfCFTA will improve intra-Africa trade, necessitating in this regard, 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 Pan African Payment and Settlement System (PAPSS) that will usher in a new phase in the African economic trajectory.”
Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), said: “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.”
The PAPPS was created at the 12th extraordinary summit of the assembly of the African Union (AU) in July 2019 as a key instrument for the implementation of the AfCFTA.