Strategic Partner Afrexim Bank Launches Pan-African Payment and Settlement System Foreseeing $5 billion Annual Savings for Africa
CWEIC Strategic Partner The African Export-Import Bank (Afrexim Bank) has announced the commercial launch of the Pan-African Payment and Settlement System (PAPSS), observing that the ground-breaking platform will save Africa more than US$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.
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, said in his remarks: “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.”
According to Afreximbank, PAPSS provides the solution to the disconnected and fragmented nature of payment and settlement systems that have long impeded intra-African trade. Prior to PAPSS, over 80 per cent of African cross-border payment transactions originating from African banks had to be routed offshore for clearing and settlement using international banking relationships. That posed multiple challenges, ranging from payment delays to operational inefficiencies and compliance concerns for the disparate regional payment systems.
PAPSS, which has been successfully piloted in the six countries of the West African Monetary Zone, delivers multiple advantages and efficiencies to intra-African trade payments, including:
- Reducing the cost, duration and time variability of cross-border payments across Africa;
- Decreasing the liquidity requirements of commercial banks for cross-border payments; and
- Strengthening oversight of cross-border payment systems by central banks.
Find out more about the PAPSS here.