AFRICA: AfCFTA and Afreximbank Roll Out Pan-African Payments System
08 October 2021
A new financial market infrastructure (FMI) was announced on 29 September 2021 by the African Export-Import Bank (Afreximbank) and the African Continental Free Trade Area (AfCFTA) Secretariat. The Pan-African Payment and Settlement System (PAPSS) will enable rapid cross-border payments in local currencies between African markets.
PAPSS is a continent-wide platform that processes, clears and settles intra-Africa trade and commerce payments, simplifying cross-border transactions and reducing dependency on hard currencies. It allows instant transaction processing and is projected to save over US$5bn annually in payment transaction costs.
Benedict Oramah, President of Afreximbank and Chairman of the PAPSS Management Board, said that the new system will not replace current payment systems, but will collaborate with them to better integrate African economies. PAPSS was commissioned after a successful pilot in the West African Monetary Zone (WAMZ). Talks are underway with other national and regional institutions to rapidly expand continent-wide connectivity through the new system.
PAPSS was created by Afreximbank, which also serves as the primary settlement agent in partnership with participating nations’ central banks. The bank offers settlement guarantees on the payment system and overdraft facilities to all settlement agents. Afreximbank has allocated US$500 million to support clearing and settlement, and approximately US$3 billion will be available to support implementation.
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