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AU, Afreximbank, AfCFTA inaugurate Pan-African payment, settlement systems

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AU, Afreximbank, AfCFTA inaugurate Pan-African payment, settlement systems

The African Union, the African Export-Import Bank (Afreximbank), and the AfCFTA have launched the Pan-African Payment and Settlement System (PAPSS), available for use.

The Nigerian News Agency , reports that PAPSS is a cross-border official market infrastructure that enables payment transactions across Africa.

The commercial launch of PAPSS, which took place in Accra, Ghana, virtually and physically, would ensure instant or near-instant transfers of funds between originators in one African country and beneficiaries in another.

Speaking at the event, Mr. Mike Ogbalu, CEO of PAPSS, said the feat was a step forward in the continent’s collective journey towards self-sufficiency.

“A journey that takes us to the prosperous Africa of our dreams, as advocated in the African Union Agenda 2063: the Africa we want.

“Our progress on this journey is guided by a clear shared vision and unity of purpose. But this, like all journeys, also requires critical infrastructure to accelerate the building blocks that will underpin a prosperous continent.

“A prosperous continent is a commercial continent; a continent that builds and retains wealth from its goods and services.

“Governments, businesses, and individuals consume goods and services that they obtain in exchange for value. The fundamental means by which it is exchanged or negotiated is through payments.

“The more efficient the payment systems, the greater the speed of exchange of value and, consequently, the greater the volume and value of trade and our subsequent prosperity.

According to him, at a continental level, establishing an efficient payment infrastructure will go a long way in removing the artificial borders that have divided the continent and robbed us of our shared prosperity.

On some of the benefits of a pan-African payment and settlement system, he said it would be the enabling infrastructure to stimulate the growth of intra-African trade and commerce.

“This is with the active participation of central banks, official institutions, regional economic communities, private sectors and other stakeholders.

“Payment infrastructure has been around both nationally and sub-regionally for a while.

“However, these systems lack interoperability, fragmented national and regional payment systems are unable to stimulate pan-African economic development and intra-African trade at the rate required to significantly increase the percentage of intra-African trade.

“These national and regional payment systems are off to a good start, generating significant modernization within their jurisdictions.

“It is paramount that we now officially integrate all of Africa to accelerate the pace of economic growth on the continent,” Ogbalu said.

Furthermore, Mr. Wamkele Mene, Secretary General of the AfCFTA Secretariat, stated that the pioneering effort to achieve a pan-African payments and settlements system would enable Africa to reduce dependency on third currencies.

According to him, it also has the potential to significantly boost intra-African trade.

It also reports that the PAPSS project started in 2016 with various commitments to understand existing regional payment systems, their advantages and disadvantages, and how best to approach establishing an Africa-wide payment infrastructure.

Engagements were made with regional economic communities, including COMESA, the East African Community and SADC, as well as all major payment system operators in Africa.

Furthermore, talks with the West African Monetary Zone (WAMZ) began in 2017 and after successful interactions with them, the Central Bank Governors of the Zone agreed to implement a pilot scheme of the system as a proof of concept.

Systems development began, as well as the development of the regulatory framework, including the PAPSS Regulations, Scheme Rules and Membership Agreements and other establishment structures required to institute the System.

In 2019, at its 12th Extraordinary Summit held in Niamey, Niger on July 7, 2019, the African Union (AU) Assembly launched the PAPSS and adopted it as a key instrument for the implementation of the Continental Free Trade Agreement African (AfCFTA). ).

This was a huge milestone as PAPSS was approved as the required payment system in Africa.

Following this Union mandate, the partners embarked on further development of the system and instituted a strong governance structure.

The PAPSS pilot at WAMZ central banks has been completed and all six central banks have tested and gone through trial operations.

In the last week of August 2021, all central banks were activated in the system and since then they have been sending live transactions throughout the WAMZ region.

Engagements with other central banks in Africa have started in earnest and there is a focus on regional payment systems to ensure mass/group connection.

With each bank joining PAPSS, thousands of their customers could trade within Africa.

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Source: NAN

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