Afreximbank and AfCFTA Announce Operational Deployment of Pan-African Payment and Settlement System

The African Import-Export Bank (Afreximbank) and the AfCFTA Secretariat today announced the operational deployment of the Pan-African Payment and Settlement System (PAPSS), a revolutionary financial market infrastructure enabling instant cross-border payments in foreign currency between African markets.

By simplifying cross-border transactions and reducing dependence on hard currencies for these transactions, the PAPSS is expected to significantly boost intra-African trade and support the implementation of the African Continental Free Trade Area (AfCFTA) .

The PAPSS will serve as a continent-wide platform for the processing, clearing and settlement of intra-African trade and commerce payments, leveraging a multilateral net settlement system. Its full implementation is expected to save the continent over US $ 5 billion in payment transaction costs each year.

The development of a pan-African payment infrastructure has been made possible by some of the main institutions on the continent. The platform was developed by Afreximbank, which also acts as the lead settlement agent in partnership with the participating African central banks.

The implementation of the infrastructure is carried out in collaboration with the Secretariat of the African Continental Free Trade Area (AfCFTA) with the endorsement of the African Union (AU).

The commissioning of the PAPSS follows a successful pilot phase in the countries of the West African Monetary Zone (WAMZ), with live transactions carried out in an instant. The West African Monetary Institute (MAOI) worked with Afreximbank to launch the system in the WAMZ.

This is an important milestone for the continent and the PAPSS is now engaged in advanced discussions with other national and regional institutions to rapidly expand connectivity continent-wide. Afreximbank provides payment system settlement guarantees and overdraft facilities to all settlement agents.

To accelerate the expansion and ensure the finality of the settlement, Afreximbank approved US $ 500 million to support clearing and settlement in the countries of the West African Monetary Zone (WAMZ). It is estimated that an additional US $ 3 billion will be made available to support continent-wide systems implementation.

Professor Benedict Oramah, Chairman of Afreximbank and Chairman of the Board of PAPSS, said:

“With the implementation of the PAPSS, Africa can expect to start reaping the benefits of the African Continental Free Trade Agreement. Afreximbank is proud to have contributed to the realization of the decades-long dream that seemed unachievable just a few years ago.

“The PAPSS is not in a position to replace existing regional and national payment systems, but to collaborate and work with them to better integrate African economies for the benefit of all. We thank the African Union, the AfCFTA Secretariat, the West African Monetary Institute and the African central banks for a remarkable result.

HE Wamkele Mene, Secretary General of the African Continental Free Trade Area, said:

“The implementation of the Agreement Establishing the AfCFTA will improve intra-African trade, requiring 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) which will usher in a new phase of the African economic trajectory.

“The introduction of PAPSS provides Africa with a greater capacity to conduct cross-border transactions and to expand the scale of active and latent opportunities for improving intra-African trade.

Godwin Emefiele, Governor of the Central Bank of Nigeria, said:

“The PAPSS was born out of our collective desire to facilitate and accelerate the growth of intra-African trade. With central banks actively working alongside Afreximbank, we are ushering in a new phase in Africa’s economic trajectory, in line with the ideals of the African Continental Free Trade Area.

“The introduction of PAPSS provides central banks with increased transparency and control, as we now have a one-stop-shop for all cross-border transactions from our various jurisdictions and across the continent. ”

Mike Ogbalu III, CEO of PAPSS said:

“The PAPSS is designed to be a fundamental link between African markets and one another and enabling individuals, businesses and governments on the continent to trade with each other in a transparent manner. The PAPSS will give new impetus to businesses to grow more easily across Africa, essentially removing the borders that have balkanized us and robbed us of our economic prosperity for so long.

“PAPSS has demonstrated its credibility through its successful pilot project and proof of concept in the WAMZ region, a region with the diversity and complexity expected in the wider African context (multilingual, multicurrency, multi-regulator, etc.) .

“After completing this important milestone, PAPSS will now focus on integrating the rest of the continent into this critical infrastructure by integrating national payment systems, regional payment systems and other financial service providers.

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