A Revolution Loading in Africa…. First, stop the WAMZ!

On Thursday, January 13, 2022, history will be made with the Pan African Payment and Settlement System (PAPSS) formal launched to the world. I am truly excited about this because it’s a dream come true.

The Pan African Payment and Settlement System (PAPSS) is the first centralized payment market infrastructure solution for processing, clearing, and settling of intra- African trade and commerce payments it is a product of the Afrieximbank and it will be launched in the West African Monetary Zone as a pilot project, after which it would then be replicated all over Africa. The idea had been in the works for a long time, however, as the former Director-General of the West African Monetary Institute (WAMI), through the support from governments in the WAMZ, the Convergence Council charged WAMI to pursue complementary programs to promote trade and financial integration to support the implementation of AfCFTA initiatives in the WAMZ. WAMI team took the challenge, the current Director-General continued with it. Afrieximbank led by the visionary President Prof. Benedict Orama and his very focused team, who already had the idea of meticulously designing this novel product to be launched on Thursday, January 13, 2022. If you know, you know!

In brief, the idea of PAPSS is for the following:

-?????????Facilitate intra- African trade and formalize some of the unrecorded trade due to the prevalence of informal cross-border trade in Africa.

-?????????Provide an alternative to current high-cost and lengthy correspondent banking relationships to facilitate trade and other economic activities among African countries, through a simple, low-cost and risk-controlled, interoperable payment clearing and settlement system.

-?????????Reduce the reliance on, and cost of foreign currency for Intra African trade.

-?????????Provide a payment, clearing, and settlement mechanism to support the international trade of African States.

With the objectives to:

-?????????Reduce the cost of cross-border payments across Africa.

-?????????Reduce duration and time variability of cross-border payments across Africa.

-?????????Decrease liquidity requirements of commercial banks for cross-border payments.

-?????????Decrease liquidity requirements of central banks for settlement as well as its payments.

-?????????Straighten Central Banks’ oversight of cross-border payment systems.

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The benefits are unparalleled because it promises to:

-?????????Expand intra-African trade and investment flow among market participants in the region thereby enabling deeper regional economic and financial integration.

-?????????Enhance market liquidity as a result of higher trading volumes would deepen capital markets.

-?????????Diversify trade concentration and capital exposure of countries within the region across more and larger market areas.

-?????????Create new business opportunities and employment across sub-regions and Africa as a whole.

-?????????Reduce end-to-end transaction costs.

-?????????Reduce operational costs for central and commercial banks as well as other payment service providers (PSPs)

-?????????Improve accessibility and reachability to market participants and users to cross-border transactions and other services.

Undoubtedly, the PAPSS platform is pivotal towards the actualization of the goal of the continent to create a single African Market through the African continental free trade area (AfCFTA). It is indeed the fulcrum of the AfCFTA because it will not only enable trade but will actualize trade since there is no trade if the payment system cannot settle transactions. It would provide a unique opportunity for structural transformation of the African continent, job creation, and poverty reduction, and potentially increase Africa’s share of global trade. Let real trading begin!

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