The successful rollout and adoption of the Pan-African Payment and Settlement System (PAPSS) could diminish the clamour for a regional or continent-wide single currency, Executive Vice President – Finance, Administration and Banking Services, Afreximbank, Denys Denya has suggested.
According to him, whilst not intended as a substitute, there remains the possibility that wide-scale adoption of the continental settlement system could make the intended single currency somewhat redundant, as the goal of removing transaction cost and other barriers might already have been achieved.
He said this in response to a question by the B&FT on the sidelines of the recently-concluded roadshow, held in Accra, which served as a precursor to the second Intra-African Trade Fair (IATF 2021) which will take place in South Africa later this year. At the event, he announced the successful piloting of PAPSS within the West African Monetary Zone (WAMZ) and disclosed that the rollout is expected to be in full force by the end of the year.
Despite the possibility, Mr. Denya stated that Afeximbank’s overarching commitment is to the ease of trade on the continent and would continue to support governments and central banks whenever the single currency comes to fruition.
“The intention of PAPSS is not to replace the unified currency, what it will do is to remove the constraint of looking for a third common currency to trade… But maybe not, we might not need the single currency as much for trade, if we can successfully trade with our respective currencies across the continent,” he explained.
Adding that, “We will be happy if Africa comes up with the single currency but that is for political leadership and the central banks to do and we will support where we can.”
The unified currency drive, across the continent and in West Africa, in particular, has hit a number of snags since it was first proposed in 2003, leading observers to question if it will become anything other than a pipe dream.
Political and economic discrepancies including failure to meet proposed convergence criteria such as curbing inflation, exchange rate stability, and maintaining sustainable debt-to-GDP levels have all hampered the roll-out of the West African currency, as there appears to be a schism between anglophone and francophone countries.
The tentative time for its rollout has now been set for 2027. This has led to suggestions from some quarters for the adoption of cryptocurrencies, which remain unregulated, as a means of payment under AfCFTA to eliminate trade transaction costs.
Also, Mr. Denya reiterated Afreximbank’s commitment to business in Ghana, which has seen some US$1.7 billion given and hinted of a further US$500 million towards supporting the local business community in the medium term.
Overall, the event was graced by high-powered delegations from the African Continental Free Trade Agreement (AfCFTA) Secretariat; Ministry of Trade and Industry; Ghana Export Promotion Authority (GEPA), and Ghana Exim Bank, who pledged their support for the success of IATF 2021.
Others include the Ghana National Chamber of Commerce and Industry, the Association of Ghana Industry and the Ghana Enterprises Agency.
