Ghana’s Vice President Launches Pan-African Payment & Settlement System

Dr Mahamudu Bawumia, Vice President, Ghana

Accra, Ghana//-Ghana’s Vice President, Dr Mahamudu Bawumia today commercial launched the much-needed Pan-African Payment & Settlement System (PAPSS) in Accra to help promote and deepen intra Africa trade and economic integration.

The PAPSS which is spearheaded by the African Export-Import Bank (Afreximbank) and African Continental Free Trade Area (AfCFTA) Secretariat has been described by various speakers at the launch as a game-changer.

He was delighted to say that through the collaborative efforts, African countries would drive maximum benefits for their citizens.

Dr Bawumia however observed that foreign currency usages within the continent sometimes put African own currencies under-pressure. But with the launch of PAPSS, this he said would a thing of the past.

Launching the PAPSS on behalf of Ghana President, Nana Addo Dankwa Akufo-Addo, Dr Bawumia today in Accra, revealed that the ground-breaking platform would save Africa more than $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.

He lauded the Afreximbank and AfCFTA Secretariat for the establishment of the payment system citing PAPSS as a major leap in releasing the continent from overdependence on external players and factors in achieving a long yearned-for acceleration in intra-continental trade and investment.

“This launch is a result of many months of hard work, resolve and commitment towards achieving set objectives for the growth of the continent in trade. All Central Banks in Africa must now join up and ensure seamless transfer of funds deploying this most practical and important African solution to an African problem,” added Dr Bawumia.

He commented on the pan African significance of Ghana hosting the event as a harbinger of the hard-won struggle for economic self-determination following the political decolonisation of the continent over 60 years ago.

The Chief Executive Officer (CEO) of PAPSS, Mike Ogbalu, said in his welcome address at the launch: “The PAPSS is a financial market infrastructure that  has been developed and initiated through a collaborative effort of the AfCFTA Secretariat, Afrixembank and the African Union Commission, working the West Africa Monetary Institute and associated central banks in the West Africa Monetary Zone”.

According to him, it is designed to ensure instant payments of goods and services between African countries, payments are initiated and settled in the local currencies of initiators and beneficiaries effectively eliminating the need for third (hard) currencies to consummate trades within the African continent.

“With every bank onboard to PAPSS, we enable thousands of their clients to trade within Africa. Every bank joining PAPSS gains access to trade with 10s of thousands of end-users already connected through our growing community of financial institutions”, Mr Ogbalu said.

He continued: “Every central bank joining the PAPSS infrastructure extends our collective reach to millions more with the resultant positive impact on intra-African trade. Together, we will  create the foundational support for the innovation of trade and payment solutions which will help the continent solve uniquely African challenges”.

PAPSS, developed by African Export-Import Bank (Afreximbank), which is expected to boost intra-African trade by transforming and facilitating payment, clearing and settlement for cross-border trade across Africa, is not designed to compete with or replace existing payment systems, but to facilitate the connectivity level that brings all payments systems together into one network that is interoperable, efficient and affordable.

“PAPSS is designed to make our currencies regain value to domesticate intra-Africa payments in this journey towards African prosperity, while providing the superhighway which connects others to reach every part of this continent as we seek to create the Africa that We Want.”

Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, revealed that the bank would back the PAPSS implementation with over $3 billion.

He assured: “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”, Prof Oramah noted.

READ MORE: https://africaneyereport.com/papss-executives-pan-african-payment-and-settlement-system-a-game-changer/

On his part, the Secretary General of AfCFTA Secretariat, Wamkele Mene, noted the PAPSS is a pioneering effort at achieving a pan African payments and settlements system which would enable Africa to reduce its reliance on third currencies, and more importantly, it has the potential to significantly boost intra-Africa trade.

He appreciated the role and commitment of the Continent’s Heads of States and Governments through the African Union, saying that their strong political will, continues to be the bedrock of progress towards a full implementation of AfCFTA that has now been strongly boosted with the commercial launch of the PAPSS.

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.

    PAPSS is also set to deliver harmonisation across the continent through its comprehensive legal, regulatory and operational framework comprising standardised rules, formats and governance arrangements, harmonised Know-Your-Customer and Anti-Money Laundering procedures, payment confirmation and settlement finality. A precondition for participation in PAPSS is compliance with its set rules and standards.

The PAPSS launch event was graced by the presence of Chief Olusegun Obasanjo, former President of the Federal Republic of Nigeria and Chairman of the IAFTA Advisory Council, and H.E Mahamadou Issoufou – former President of Republic of Niger who is acknowledged as a champion in driving the establishment of the AfCTA Initiative. H.E Issoufou lauded the far-reaching vision and determination of African leaders in establishing the world’s largest free trade area.

Featuring presentations by H.E. Wamkele Mene, Secretary General AfCFTA Secretariat; Godwin Emefiele, Governor, Central Bank of Nigeria and Chairman PAPSS Governing Council, the launch was witnessed by representatives of the Presidents of Egypt and Uganda (and DRC representing Chair of AUC) who proffered their respective congratulations and support for the launch of PAPSS, a potential game-changer in Africa’s economic destiny.

African Eye Report