*The African Continental Free Trade Area (AfCFTA) and experts have opined the recent inauguration of the Afrocentric payments system is a feat and step forward in the continent鈥檚 collective journey towards self-reliance and shared prosperity

Gbenga Kayode | 绿帽献妻

In order to ensure consumers鈥� effective instant or near-instant transfers of funds between originators in one African country and beneficiaries in another, the African Union (AU), African Export-Import Bank (Afreximbank) and AfCFTA have launched the Pan-African Payments and Settlements System (PAPSS).

PAPSS is a new cross-border, financial market infrastructure enabling payment transactions across the African continent, which experts said holds promise to save the continent about $5billion annually.

绿帽献妻 gathered the commercial activation of PAPSS, which held in Accra, Ghanaian capital, virtually and physically, was designed to ensure instant or near-instant transfers of funds between originators in one African country and beneficiaries in another.

Mr. Mike Ogbalu, Chief Executive Officer (CEO) of PAPSS, in his address on the occasion, noted the inauguration of the payment system was a step forward in the continent鈥檚 collective journey towards self-reliance, agency report said.

Ogbalu said: 鈥淎 journey that is leading us to the prosperous Africa of our dreams as espoused in the African Union鈥檚 Agenda 2063: the Africa We Want.

鈥淥ur progress on this journey has as its guiding lights a clear shared vision and unity of purpose.

鈥淏ut this, like every journey also requires critical infrastructure to accelerate the fundamental elements that will underpin a prosperous continent.鈥�

The PAPSS Chief Executive also stated: 鈥淎 prosperous continent is a trading continent; a continent that builds and retains wealth from its goods and services.

鈥淕overnments, businesses, and individuals consume goods and services which they obtain in exchange for value.

He further said: 鈥淭he fundamental means by which value is exchanged or traded is through payments.

鈥淭he more efficient payments systems are, the higher the velocity of value exchange and consequently, the higher the volume and value of trade and our subsequent prosperity.

On a continental level, Ogbalu declared that establishing an efficient payment infrastructure will go a long way to eliminate the artificial borders that have divided the continent and robbed us of our shared prosperity.

Core benefits of Pan-Africa payments and settlements system

Meanwhile, stakeholders have highlighted some of the benefits of a Pan-Africa payments and settlements system.

The CEO of PAPSS said that it would be the enabling infrastructure to spur the growth of intra-African trade and commerce.

Ogbalu further noted: 鈥淭his is with the active participation of central banks, financial institutions, regional economic communities, private sectors, and other stakeholders.

鈥淧ayment infrastructure has existed at both national and sub-regional levels for a while.鈥�

He also affirmed that 鈥渢hese systems, however, lack interoperability, fragmented national and regional payment systems cannot stimulate pan-African economic development and intra-African trade at the pace required to significantly increase the percentage of trade among African countries.

鈥淭hese national and regional payments systems have made a good start, bringing about significant modernisation within their jurisdictions.

鈥淚t is paramount that we now integrate all of Africa financially to hasten the pace of economic growth in the continent,鈥�

Mr. Wamkele Mene, Secretary-General, AfCFTA Secretariat, also disclosed that the pioneering effort at achieving a pan-African payments and settlements system would enable Africa to reduce reliance on third currencies.

The initiative also has the potential to significantly boost intra-Africa trade, according to AfCFTA Chief.

The journey to launch of PAPSS project

It is recalled the PAPSS project started in 2016 with various engagements to understand the existing regional payments systems, their pros and cons and how best to approach the establishment of an Africa-wide payments infrastructure.

Engagements took place with Regional Economic Communities including COMESA, East African Community, and SADC, as well as with all major payments systems operators in Africa, according to report.

Discussions with the West African Monetary Zone (WAMZ) commenced in 2017 and following 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.

Whereas systems development commenced, and development of the regulatory framework, including the PAPSS Bye-Law, Scheme Rules and Membership Agreements and other establishment structures required for instituting the System.

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

This process considered a great milestone as PAPSS was endorsed as the required payment is considered a system in Africa.

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

Meanwhile, the PAPSS pilot in WAMZ Central Banks has been completed, and all six Central Banks have tested and gone through the trial operations, report said.

Consequnetly, in late August 2021, all the Central Banks are said to have become live on the system and have since been sending through live transactions across the WAMZ region.

With every bank onboarded to PAPSS, thousands of their clients would be enabled to trade within Africa.

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