The Association of Ghana Industries (AGI) and Ghana Union of Traders’ Associations (GUTA) have hailed the of the Pan-African Payment and Settlement System’s (PAPSS) introduction, saying the Africa Continental Free Trade Area’s (AfCFTA) success hinges on how businesses can conveniently pay for goods and services.
They said buying and selling within the continent has always not only been expensive but almost impossible owing to the lack of a common payment platform, and they are hopeful that PAPSS – a superhighway for payments within the continent that ensures instant or near-instant transfers of funds between originators in one African country and beneficiaries in another – will bring much-needed payment convenience to boost intra-Africa trade.
“One of the major problems with trading in Africa is how to pay for goods when the transactions are done. The difficulty is due to different currencies and rates to the international currencies,” AGI’s Chief Executive Officer Seth Twum Akwaboah told the B&FT, alluding to the complexities which varying financial systems and over 40 currencies on the continent present to trade among economies in the AfCFTA bloc.
He is hopeful that PAPSS, which was launched earlier this month, will help manufacturers reduce transaction cost by making payments easy.
Although the intervention has just been launched and manufacturers have yet to experience it, he said it is a positive development deserving of commendation: “We would encourage our members to make use of this system. We are also happy the Bank of Ghana is involved just like other central banks across Africa,” he said.
GUTA President, Dr. Joseph Obeng, is similarly upbeat PAPSS will eliminate what he calls “the major barrier to cross-border trade among the continent’s economies” by serving as a common payment platform.
“From what we have been told, we do not have to rely on foreign currencies to transact business anymore; and this is going to make it easier to trade because it’s not going to add any cost,” said Dr. Obeng, whose outfit is the umbrella-body of traders in the country.
PAPSS was launched last month by the Afreximbank and AfCFTA secretariat in Accra, as part efforts to ease payment and trade among African countries under the free trade agreement.
AfCFTA’s Secretary-General, Wamekele Mene, believes that with the launch of PAPSS – a critical tool for boosting intra-Africa trade – AfCFTA implementation is well-positioned to benefit SMEs, young entrepreneurs and those trading across borders in Africa by significantly reducing the cost of cross-border trade.
He further described it as a great pioneering effort at achieving a pan African payments and settlements system that will enable businesses to reduce reliance on third currencies; and more importantly, to significantly boost intra-Africa trade.
It is expected PAPSS will eliminate the US$5billion that Africa spends as cost of payment for transactions yearly, and provide the necessary infrastructure to spur growth of intra-Africa trade and commerce. It will also serve as an added tool for monetary policy management for most African countries.
Most countries are expected to switch onto PAPSS after a progress report is presented to the Africa Union’s Assembly of Heads of States and Governments next month.