*New payment system to save continent $5bn annual forex outflow launched
The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has said the newly launched Pan-African Payment and Settlement System (PAPSS) will simplify cross-border trade and reduce the heavy dependence on the US dollars, Pounds and Euro intra-African trade.
Emefiele said this yesterday in Accra, Ghana, during the launch of PAPSS.
PAPSS is a cross-border financial market infrastructure enabling payment transactions across Africa, bridging trade challenges in a continent with over 41 known currencies. It is expected to boost intra-African trade by transforming and facilitating payment, clearing and settlement for cross-border trade across Africa.
PAPSS provides the solution to the disconnected and fragmented nature of payment and settlement systems that had long impeded intra-African trade.
The Africa Export-Import Bank (Afreximbank), in collaboration with African Union (AU) and African Continental Free Trade Area (AfCFTA), officially launched the platform for commercial use.
The CBN governor described the PAPPS as a breakthrough achievement for the continent, saying it would help facilitate trade and enhance payment gateway across West Africa.
According to Emefiele, the new payment solution would contribute towards formalising trade in the continent, adding that it would be beneficial to households, firms and financial institutions in the continent.
He estimated that intra-African trade would increase to 35 per cent, from 15 per cent in the next five years with infrastructure provided by PAPSS.
He also pointed out that with growing pace of digitalisation in financial services, the PAPSS could serve as a viable platform for supporting e-commerce in the continent.
“Businesses can be assured of an efficient and reliable payment gateway that supports the instant flow of funds and relatively the use of safe payment channels that usually comes at a high cost to households and businesses.
“Prior to the launch of PAPSS, settlements for intra Africa trade required a third currency and a non-African correspondent bank. This resulted in an estimated loss of close to $5 billion annually and undermined trade in Africa countries.
“The launch of PAPPS gives the fresh opportunity and aspiration for the African continent. It will simplify cross-border transactions, reduce third currencies for intra-African transactions and remove the need for correspondent banks and ultimately amplify intra trade significantly.
“CBN will ensure the financial institutions under its jurisdiction accept PAPSS and recommend it to businesses across Nigeria,” Emefiele said.
Ghana’s President, Nana Akufo-Addo, who was represented by the country’s Vice President, Dr. Mahamudu Bawumia hosted and presided over the commercial launch of the PAPSS, saying that the platform would save Africa more than $5 billion annually in payment transaction costs, while it plays an increasingly significant role in accelerating the continent’s transactions underpinning the operationalisation of the AfCFTA.
Akufo-Addo complimented Afreximbank and AfCFTA Secretariat for establishing the payment system, citing PAPSS as a major leap in releasing the continent from overdependence on external players and factors in achieving a long yearned-for acceleration in intra-continental trade and investment.
“This launch is a result of many months of hard work, resolve and commitment towards achieving set objectives for the growth of the continent in trade. All Central Banks in Africa must now join up and ensure seamless transfer of funds deploying this most practical and important African solution to an African problem,” he added.
In his comment, President and Chairman of the Board of Directors of Afreximbank, Prof. Benedict Oramah said: “We are eager to build upon the African Continental Free Trade Area’s creation of a single market throughout Africa, and PAPSS provides the state-of-the-art financial market infrastructure connecting African markets to each other thereby enabling instant cross-border payments in respective local African currencies for cross-border trade. “Afreximbank as the main Settlement Agent for PAPSS, provides settlement guarantees on the payment system and overdraft facilities to all settlement agents, in partnership with Africa’s participating Central Banks. “PAPSS will effectively eliminate Africa’s financial borders, formalise and integrate Africa’s payment systems, and play a major role in facilitating and accelerating the huge AfCFTA-induced growth curve in intra-African trade.”
The event was graced by Chief Olusegun Obasanjo, former President of Nigeria and Chairman of the IAFTA Advisory Council, and Mahamadou Issoufou – former President of Republic of Niger who is acknowledged as a champion in driving the establishment of the AfCTA Initiative.
In his presentation, PAPSS CEO Mr. Mike Ogbalu emphasised that the payment system was not designed to compete with or replace existing payment systems, but to facilitate the connectivity level that brings all payments systems together into one network that is interoperable, efficient and affordable.
“PAPSS is designed to make our currencies regain value to domesticate intra-Africa payments in this journey towards African prosperity, while providing the superhighway which connects others to reach every part of this continent as we seek to create the Africa that We Want.”
On his part, the AfCFTA Secretary General H.E Wamkele Mene appreciated the role and commitment of the Continent’s Heads of States and Governments through the African Union, saying their strong political will continue to be the bedrock of progress towards a full implementation of AfCFTA.