By Emmanuel Nduka
Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has informed that the Pan-African Payment and Settlement System (PAPSS) will enhance cross-border transactions across Africa.
Speaking on Thursday in Accra, Ghana, at the launch of PAPSS, Emefiele noted that the platform which was launched by the Africa Export-Import Bank (Afreximbank), in collaboration with African Union (AU) and African Continental Free Trade Area (AfCFTA), will further reduce the use of other currencies like dollar, pound, euro, and others, in intra-African trade.
PAPSS is a cross-border financial market infrastructure enabling payment transactions across Africa, in order to ease trade challenges in a continent with over 40 currencies.
The CBN Governor aslo told attendees at the launch that the payment platform would benefit households, businesses, and financial institutions working around Africa’s growth.
Emefiele added that the launch of the platform is a milestone in efforts to build pan-African infrastructure that enhances payment gateway across West Africa.
“For example, 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,” he noted.
He further explained that as a percentage of total trade, intra-African trade is expected to increase to 35 per cent from 15 percent in five years with infrastructure provided by PAPSS as payments and settlements are resolved.
“With the growing pace of digitisation in financial services which has been accelerated from the onset of the COVID-19 pandemic, PAPSS can serve as a viable platform for supporting e-commerce in Africa,” he added.
Wamkele Mene, AfCFTA Secretary-General, in his remarks, expressed optimism about the launch of the pan-African payment and settlement system, saying it would enable Africa to reduce reliance on third currencies and boost intra-Africa trade.