Wide-scale adoption by commercial banks and other payment and settlement players remains the most important determinant of the success of the Pan-African Payment and Settlement System (PAPSS).
This is according to Managing Partner at corporate and commercial law firm Koranteng & Koranteng, Afua Adubea Koranteng, who says that increased collaboration will reduce prevailing inefficiencies and ensure that the projected savings from the implementation of PAPSS are not eroded.
The system, which was formally launched in January, is expected to save the continent an estimated US$5billion in transaction fees.
Speaking ahead of the 2022 edition of the Money Summit organised by the Business and Financial Times (B&FT), which has as its theme: Africa’s Economic Growth: Facilitating Investments, Payments and Settlement Systems, she said: “The key thing is onboarding more financial institutions – fintechs, payment system providers, banks and others within the region”.
These institutions, particularly banks, have much to benefit from onboarding onto the platform, she said. She also stated that the move would see a reduction in the liquidity requirements for settlements.
In addition to the savings in transaction fees, PAPSS is projected to boost exports from the continent by some US$560billion, translating to an additional US$450billion in income by 2035.
Sensitisation
Mrs. Koranteng further stated that additional sensitisation at the business and household levels must be accelerated. She said this must be done in a manner that is easy to understand.
“As much as we have heard that PAPSS has been launched, I doubt many businesses beyond the financial services providers are aware of the benefits of the system. Clearly, there needs to be more enhancement in education, not only in Ghana, but across the continent. There isn’t enough education; the general public needs to know more. The information has to trickle down to businesses,” she explained.
Touching on ways to further improve the current framework, the lawyer stated that there must be greater integration with impending central bank-backed digital currencies, noting that developments in the digital finance space will only serve to further enhance cross-border payments on the continent.
Additionally, she noted, governments must endeavour to provide improved financial incentives to drive participation on the PAPSS platform as well as ensure that avenues for addressing conflict are transparent and expeditious.
“Being a new platform, there will be lingering concerns about what happens in the event that there is some conflict, whether from senders or receivers, or through their intermediaries. At a time when suspicions persist in the financial sector, it is necessary for users of the platform to have the confidence that whatever conflicts might arise will be addressed in a manner that is deemed fair to all,” she stated.
The infrastructure supplied by PAPSS is estimated to grow intra-African trade from less than 2 percent to over 35 percent within the next five years.
The Money Summit 2022
Mrs. Koranteng will be part of the first plenary session on the topic ‘Africa’s payment and settlement system; Opportunities, Challenges and the Way Forward’. The Money Summit 2022 seeks to provide the perfect opportunity to bring together all stakeholders in payment including the African Union, Africa Continental Free Trade Area (AfCFTA), Afreximbank, central banks, commercial banks, payment service providers, fintechs and remittance service providers to converge at one location and dissect the issues and proffer concrete solutions moving forward.
