AfCFTA’s payment system will contribute $5bn yearly – Mene

The Pan-African Payment and Settlement System will reduce the cost of transactions among African countries by $5bn yearly.

The Secretary-General, African Continental Free Trade Area, Mr Wamkele Mene, who is on official tour to Nigeria, made this known to newsmen on Wednesday.

He said the pilot phase of the PAPSS was ongoing in six West African countries to facilitate AfCFTA’s implementation.

PAPSS, a centralised payment and settlement market infrastructure for processing, clearing and settling of intra-African trade payments, was adopted in July 2019 by the African Union Heads of State as the payment and settlement system to support the implementation of AfCFTA.

It is expected to create new financial flows and facilitate trade and other economic activities among the African countries.

According to Mene, the system, which would be ready at the end of 2021, is the first major step taken at addressing some of the challenges related to the cost of currency convertibility under AfCFTA implementation.

“We have started a pilot phase of the Pan-African payment and settlement platform of six countries in West Africa that have switched on to the platform. Transactions are already happening within these six countries that are at an advanced stage of the pilot project.

“So, the platform will make a significant contribution and our estimate is that it will reduce the cost of transactions by $5bn yearly, being the aggregate amount spent on currency convertibility,” he said.

Africa, Mene explained, has 42 currencies and that the cost of the currency convertibility is actually a constraint to intra-Africa trade.

This is making the continent feel inefficient and its trade unnecessarily expensive, thereby adding to the cost of doing business, especially the Micro, Small and Medium Enterprises, he stressed.

“When the system is fully up and running, you will be able to transact with somebody in Kenya in naira and they will receive Kenya shillings, as Afreximbank will be the correspondent facility.

“We are working with them as the secretariat, but they have been very strong in investing in African solutions. This pan-African payment system is certainly one of the most significant achievements in the last 60 years.

“We are not going to have a common currency overnight in Africa, we are still going to grapple with this issue of different currencies. But with the payment and settlement system, we have taken the first major step in addressing some of the challenges related to the cost of currency,” Mene added.

The interim PAPSS Governing Council comprised the central bank governors of the six countries of the West African Monetary Zone, African Union Commissioner for Economic Affairs, AfCFTA Secretary-General and a representative each from African Development Bank and Afreximbank.

Ehime Alex
Ehime Alex
Ehime Alex reports the Capital Market, Energy, and ICT. He is a skilled webmaster and digital media enthusiast.

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