The African Continental Free Trade Area (AfCFTA) Secretariat has revealed that pilot phase of the Pan African Payment and Settlement System (PAPSS) is ongoing in six West African countries to facilitate AfCFTA’s implementation.
This was disclosed by AfCFTA Secretary-General, Mr Wamkele Mene, on Wednesday during a chat with newsmen in Abuja on tour to Nigeria.
Note that PAPSS is a centralised payment and settlement market infrastructure for processing, clearing and settling of intra-African trade and commerce payments.
Adopted in July 2019 by the African Union Heads of State as the payment and settlement system to support the implementation of the AfCFTA, PAPSS is expected to create new financial flows and successfully facilitate trade and other economic activities among African countries.
Afreximbank is the operator and the main Settlement Agent for PAPSS. The Bank will provide settlement guarantee on the payment system as well as overdraft facilities to all settlement agents.
It would be recalled that Interim Governing Council of PAPSS had in December 2020, in Cairo met on step towards operationalisation of the payment system which was developed by African Export-Import Bank (Afreximbank), under the auspices of AfCFTA Secretariat and AU.
Mene said that the system which would be ready at the end of 2021 was the first major step taken in addressing some challenges related to the cost of currency convertability under AfCFTA implementation.
“We have started a piloting phase of the Pan-African payment and settlement platform of six countries in West Africa who 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 five billion dollars annually, being the aggregate amount that is spent on currency convertibility,” he said.
Mene further explained that Africa has 42 currencies and the cost of the currency convertibility was actually a constraint to intra-Africa Trade.