Intra-Africa Trade Payments: PAPSS is a game-changer for the continent
Effective trading in Africa requires payments (making and receiving them) working
seamlessly, efficiently, quickly, and at low cost. The Pan-African Payment and
Settlement System (PAPSS) will facilitate the payment, clearing and settlement system
for intra-African trade. It will transform how payments are made across borders in
For businesses, time is money and delays can severely impact trade, working capital
availability and the ability for businesses to grasp opportunities and grow.
Currently, there are numerous impediments and challenges facing intra-African trade
payments. Banks must navigate sometimes conflicting local, multi-country and multiregional regulations to enable the seamless movement of funds on behalf of their
diverse customers across the continent. Operational inefficiencies and onerous
compliance requirements are time-consuming impediments. For instance, frictions in
Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) measures
implemented at national levels sometimes differ from the Financial Action Task Force
standards. Also, the Treasury and Cash Management needs of Africa’s corporates are
becoming increasingly more complex.
Fragmented regional payment systems have resulted in the formation of regional
switches to enable payments across Africa. The upshot of all these issues – prior to
PAPSS – is that about 80% of African payments are cleared and settled offshore using
international banking relationships. This incurs significant transaction costs for the
PAPSS – A ground-breaking platform
With the formal introduction of the Africa Continental Free Trade Area agreement just
over a year ago, intra-African trade and economic interactions have now entered a
new era of strong potential for enhanced and spectacular growth.
Faster, cheaper, more transparent, and more inclusive cross-border payment services
– while maintaining safety and security - have widespread benefits for citizens and
economies worldwide: supporting economic growth, international trade, global
development and financial inclusion.
PAPSS now promises to connect the continent by providing the financial market
infrastructure that will link African markets and enable instant payment for
transactions, and at lower cost. This laudable initiative will support the initiation of
cross border retail payments in local currencies. For example, it will allow a customer
in Togo to pay in the XOF currency, while the seller in Ghana will receive payment in
Ghanaian Cedi, thus eliminating any need for the US Dollar or the Euro. When fully
operational, PAPSS is forecast to save Africa US$5 billion every year in payment
Our Group Chief Executive Officer, Ade Ayeyemi, positions PAPSS as a game-changer
for intra-African trade payments.
In his keynote speech at the event marking the commercial launch of PAPSS on 13
January 2022, he said: “We have entered a new era. The growth will result in a
prosperous Africa, one that will positively change the narrative of this continent, of
rich culture, vast resources and resilient and hard-working people.”
The Africa we want is getting closer and will be hastened by the successful
implementation of PAPSS. As the leading Pan-African institution, Ecobank Group,
which already operates a payment switch across its network of 33 countries, will
provide the necessary support to make this important initiative a huge success.