AfCFTA Window: PAPSS to revolutionise trade within Africa

The African Continental Free Trade Agreement (AfCFTA) is set to revolutionize trade within the African continent, and at the heart of this transformation lies the Pan-African Payment and Settlement System (PAPSS). PAPSS, a new payment solution, aims to enhance trade by improving efficiencies in payments and transactions. In a recent interview with CNBC Africa, John Bosco Sebabi, Deputy CEO of AfCFTA, shed light on the significance of PAPSS and how it will drive economic growth and development across the region. The AfCFTA, signed in 2018 in Kigali, Rwanda, has four key pillars, one of which is the payment infrastructure. The implementation of PAPSS is crucial for streamlining payments and facilitating trade within the continent. By ensuring instant payments, PAPSS enables buyers and sellers to transact seamlessly in their local currencies, eliminating the need for foreign exchange. The system operates with remarkable speed, with transactions averaging between 7 to 12 seconds, enhancing efficiency and reducing costs associated with traditional payment methods. One of the standout features of PAPSS is its focus on reducing costs for economic operators. By cutting out charges and streamlining the payment process, PAPSS aims to save the continent an estimated $5 billion in charges alone. Moreover, by settling transactions within the continent, as opposed to the current practice of settling outside the continent, PAPSS aims to drive significant savings and enhance financial stability. Central banks play a pivotal role in the success of PAPSS, with 11 central banks already onboard the project. These central banks serve both regulatory and settlement functions within the system, ensuring compliance and efficiency in payments. Moving forward, the goal is to onboard all 41 central banks in the continent, with expectations to achieve this milestone by the end of the next year. Commercial banks also play a crucial role in the PAPSS ecosystem, with 81 banks already signed up for the initiative. The involvement of both central and commercial banks underscores the collaborative effort to enhance intra-African trade and boost economic growth. Through partnership with regional economic communities and the Association of African Central Banks, PAPSS aims to create a seamless payment system that benefits all stakeholders. The inclusive nature of PAPSS ensures that even small and medium-sized enterprises (SMEs) can benefit from the system. By providing access to fintech companies through commercial banks, PAPSS opens up opportunities for SMEs to participate in the growing intra-African trade ecosystem while adhering to prudential norms and regulations. In conclusion, the introduction of PAPSS marks a significant milestone in the journey towards enhancing intra-African trade. With its focus on speed, efficiency, cost reduction, and inclusivity, PAPSS is set to revolutionize the way payments are made and transactions are conducted within the continent. As PAPSS continues to onboard more central and commercial banks, the vision of a unified and prosperous African economy draws closer to realization.