Business transactions under African Continental Free Trade Area (AfCFTA) are expected to be made convenient and efficient with the introduction of the Pan African Payment and Settlement System (PAPSS).
The PAPSS, initiated by the Afreximbank with endorsement from the various heads of states, will ensure that the plurality of currencies do not become a hindrance to trade.
An AfCFTA expert and trade practitioner, Louis Yaw Afful explained how the PAPSS works.
He says, “an individual will just need to go to his commercial bank, advise his commercial bank that he wants to transfer using PAPSS. It is important to make that instruction. So, whatever amount he or she wants to transfer to someone in Nigeria, Senegal, anywhere in Africa, he does not need your currency. You don’t need the dollar. The bank using PAPSS will settle in his currency, and you will receive it in your currency. This eliminates the bottlenecks and the delays. It takes just about eight seconds.”
He revealed that many enormous benefits reside with the PAPSS introduction including benefits to financial technology companies.
Mr. Afful said, “commercial banks who have ICT or FinTech firms as clients can outsource and give them the opportunity. PAPSS can work closely with these third-party firms to support a bit of what they do. It would not only be a government machinery between central bank to central bank.”
He described the PAPSS as a major milestone that would not only make trade easier but would save Africa billions of dollars.
Mr. Louis Yaw Afful, who is the Executive Director of the AfCFTA Policy Network indicated that due to the use of Visa and Credit cards, “80% of transfers hit outside Africa before coming down and it is estimated that it leads to 5 billion of loss every year.”