In a groundbreaking development, the African Export-Import Bank (Afreximbank) has announced its plans to domesticate all intra-African payments, bringing African and CARICOM economies one step closer to full integration.
The initiative, known as the Pan-African Payment and Settlement System (PAPSS), aims to make every African currency convertible within the continent; thus facilitating seamless trade and economic cooperation. Afreximbank has allocated an impressive sum of US$3billion to back the Clearing and Settlements for this transformative project.
Prof. Benedict O. Oramah, President and Chairman-Board of Directors, Afreximbank, delivered an enlightening speech during the bank’s 30th anniversary celebration and 30th Annual Meetings of shareholders.
He expressed his enthusiasm for realisation of the long-awaited roadmap, emphasising that the concerted efforts of African leaders, the African Union, AfCFTA secretariat and Afreximbank as the underlying financial institution have finally brought these ambitions to fruition.
PAPSS is expected to generate substantial benefits for the continent, saving an estimated US$5billion in intra-African transfer charges. Moreover, it will streamline payments for intra-African trade conducted in African currencies – enabling individuals and businesses to transact seamlessly across borders. For instance, a Gambian can purchase Nigerian urea fertiliser using Gambian Dalasi to acquire naira, while a Ghanaian can pay for holidays in Seychelles with Ghanaian cedi. Even a small-scale farmer in rural Zambia can enjoy her favorite Nollywood movie by paying in Zambian kwacha.
Aside from PAPSS, Afreximbank has undertaken other initiatives to support implementation of the African Continental Free Trade Area (AfCFTA). The bank has disbursed over US$20billion in trade finance over the past five years, with a projection to double that amount to US$40billion by 2026 – effectively addressing the significant intra-Africa trade finance gap.
Afreximbank played a pivotal role in facilitating execution of the largest Intra-African construction contract – by Egyptian contractors for a dam in Tanzania, as well as supporting phosphate fertiliser exports from Morocco to Nigeria and Ethiopia. The bank’s support has also assisted Vista Bank in Burkina Faso with the acquisition of BNP subsidiaries in West Africa.
To further strengthen the trade ecosystem, Afreximbank and the AfCFTA Secretariat have established the AfCFTA Adjustment Fund, aiming to compensate eligible countries for tariff revenue losses arising from the new trade regime. This fund will also support the private sector in adjusting to the new arrangement. The AfCFTA Adjustment Fund, with a headquarters in Kigali, Rwanda, has received a commitment of US$1billion from Afreximbank, including US$10million in grant funding.
Recognising the importance of harmonised trade standards, Afreximbank has collaborated with the African Regional Standards Organisation (ARSO) to harmonise over 155 standards – particularly in the automobile, medical equipment, pharmaceutical and textile sectors. Additionally, the bank is actively building testing, inspection and certification centres across Africa – known as Africa Quality Assurance Centres (AQACs) – in collaboration with Bureau Veritas of France. These centres will provide the necessary infrastructure to implement trade standards effectively.
The digital revolution is also a key focus for Afreximbank, as it aims to overcome barriers posed by the continent’s numerous borders. Afreximbank has developed the Africa Trade Gateway, a centralised platform that leverages artificial intelligence (AI) to predict supply chains, offers customer due diligence services, and provides information on trade, banking and investment regulations. The platform also offers payment, banking and e-logistic services, along with an AfCFTA-compliant e-commerce platform called the Africa Trade Exchange (ATEX). The Africa Trade Gateway is expected to serve as a powerful single window for conducting intra-Africa trade.
As international banks withdraw from Africa, Afreximbank has taken significant strides in improving access to letters of credit and other trade services across the continent. The bank has established SWIFT communication arrangements with nearly 500 of the 600 regulated commercial banks in Africa, making it the financial institution with broadest reach on the continent. To date, trade lines have been extended to over 200 banks, totalling more than US$4billion with a target of reaching US$8billion by the end of 2026. This ensures that businesses and individuals across Africa have convenient access to Afreximbank’s services, regardless of their location.
With these ambitious initiatives and financial commitments, Afreximbank is paving the way for a more integrated and prosperous African continent. By eliminating payment barriers, harmonising trade standards and leveraging digital technology, Afreximbank is empowering African nations to unlock their full economic potential and realise their development aspirations.
