African delegates pose for a group photo during the official launch of Pan-African Payments and Settlement System (PAPSS) . / Courtesy The Pan-African Payments and Settlement System (PAPSS) launched Thursday, January 13 , in Ghana, leaders say, will provide African traders a faster and safer mode of payment, among other things.
The new system allows a buyer in one African country to make a payment in his or her national currency and a seller in another country receives payment in his or her own national currency, effectively eliminating the need for third party currencies such as the US dollar to complete trade within the continent.
Ade Ayeyemi, CEO Ecobank Group, noted that instant payment is critical as it enables people in Africa “to be able to transact across the continent without the need to say, ‘where do I get the currency to buy from?”
For the very first time, traders will be able to pay and receive payment in their local currencies, thereby removing the cost of acquiring “hard currencies.”
Its virtual launch, held under the theme: “Connecting Payments, Accelerating Africa’s trade,” came following a “successful pilot” in six countries – Gambia, Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone.
Payment infrastructure always existed but on the national and sub-regional levels, they lacked crucial ingredients such as interoperability.
The system has been piloted and tested and “proved to work,” using African currencies, said Mike Ogbalu, the CEO of PAPSS.
The journey started in 2016 with various engagements to understand existing regional payment systems’ pros and cons and how best to approach the establishment of a continental payment infrastructure.
In July 2019, African leaders endorsed PAPSS as a key instrument for the implementation of the AfCFTA agreement.
By and large, the new payment and settlement system is seen as an enabler of the AfCFTA agreemen t, a flagship project of the African Union’s long-term development strategy for transforming the continent into a global powerhouse of the future.
In order to enable instant payments across African borders in local currency, the new system supports three core processes: instant payment, pre-funding and net settlement.The PAPSS has, for long, been envisaged as a very important pillar for the implementation of the AfCFTA as it was developed to facilitate payments and formalize the huge informal cross-border trading activities on the continent.Dennis Karera, the East African Business Council (EABC) focal point on the AfCFTA, told The New Times that the new system comes to address […]