In a significant move towards enhancing intra-African trade and streamlining cross-border transactions, the President of the African Import-Export Bank (Afreximbank), Prof Benedict Oramah, has announced the commercial launch of the Pan-African Payment and Settlement System (PAPSS). This new payment system is set to revolutionize the African trade landscape by facilitating intra-African payments and addressing the estimated $5 billion annual loss resulting from the absence of such a system.
During an exclusive interview with ARISE NEWS, Prof Benedict Oramah emphasized the urgent need for a unified payment system within Africa. With 42 currencies and an equal number of fragmented payment systems across the continent, conducting business transactions has been a complex and costly process. Oramah highlighted that the current system often leads to delays of up to 14 days for intra-regional payments, hindering the growth and efficiency of trade.
The introduction of the PAPSS aims to alleviate these challenges and promote economic integration. By utilizing a multilateral debt settlement system, the PAPSS will enable the domestication of intra-African payments, reducing the reliance on foreign currencies and easing trade across borders. Oramah emphasized that this initiative goes beyond currency usage; it entails integrating the infrastructure of various payment systems to facilitate seamless transactions. For instance, a farmer in Zambia will be able to pay for Nigerian movies in Zambian Kwacha, promoting cultural exchanges and fostering economic cooperation.
Furthermore, the PAPSS will have far-reaching benefits, including reducing sovereign debts for many countries as payments for services and infrastructure projects can now be made in African currencies. It will also address the challenge of airlines operating within Africa, as they will be able to receive payments in their respective national currencies, increasing the feasibility of expanding routes and opening doors to more African countries.
The recent Afreximbank annual meetings and 30th-anniversary celebration in Accra, Ghana, served as a platform to showcase these transformative initiatives. The event witnessed a record number of over 5,000 attendees from 90 countries. Oramah highlighted the launch of the Afreximbank group, which includes the Afreximbank Fund for Export Development in Africa, a multilateral fund based in Kigali, Rwanda, and the Afreximbank Insurance Management Entity. These initiatives, alongside the PAPSS, will contribute to the implementation of the African Continental Free Trade Area (AfCFTA).
The launch of the Pan-African Payment and Settlement System marks a significant milestone in Africa’s pursuit of economic integration and intra-regional trade facilitation. By simplifying payment processes, reducing costs, and promoting cross-border commerce, the PAPSS aims to unlock the continent’s vast potential and drive sustainable economic growth for the benefit of all African nations.
Key Highlights
- African Import-Export Bank introduces Pan-African Payment and Settlement System (PAPSS) to enable intra-African payments and address the annual $5 billion loss caused by the absence of such a system.
- The PAPSS aims to simplify cross-border transactions by reducing the need for currency conversions among the 42 African currencies and fragmented payment systems.
- By domesticating intra-African payments, the PAPSS will foster trade integration, reduce costs, and enhance economic cooperation within the continent.
