Effective trading in Africa requires payments (making and receiving them) working seamlessly, efficiently, quickly, and at low cost. The Pan-African Payment and Settlement System (PAPSS) will facilitate the payment, clearing and settlement system for intra-African trade. It will transform how payments are made across borders in Africa.

For businesses, time is money and delays can severely impact trade, working capital availability and the ability for businesses to grasp opportunities and grow.

Currently, there are numerous impediments and challenges facing intra-African trade payments. Banks must navigate sometimes conflicting local, multi-country and multiregional regulations to enable the seamless movement of funds on behalf of their diverse customers across the continent. Operational inefficiencies and onerous compliance requirements are time-consuming impediments. For instance, frictions in Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) measures implemented at national levels sometimes differ from the Financial Action Task Force standards. Also, the Treasury and Cash Management needs of Africa’s corporates are becoming increasingly more complex.

Fragmented regional payment systems have resulted in the formation of regional switches to enable payments across Africa. The upshot of all these issues – prior to PAPSS – is that about 80% of African payments are cleared and settled offshore using international banking relationships. This incurs significant transaction costs for the continent.

PAPSS – A ground-breaking platform

With the formal introduction of the Africa Continental Free Trade Area agreement just over a year ago, intra-African trade and economic interactions have now entered a new era of strong potential for enhanced and spectacular growth.

Faster, cheaper, more transparent, and more inclusive cross-border payment services – while maintaining safety and security - have widespread benefits for citizens and economies worldwide: supporting economic growth, international trade, global development and financial inclusion.

PAPSS now promises to connect the continent by providing the financial market infrastructure that will link African markets and enable instant payment for transactions, and at lower cost. This laudable initiative will support the initiation of cross border retail payments in local currencies. For example, it will allow a customer in Togo to pay in the XOF currency, while the seller in Ghana will receive payment in Ghanaian Cedi, thus eliminating any need for the US Dollar or the Euro. When fully operational, PAPSS is forecast to save Africa US$5 billion every year in payment transaction fees

Our Group Chief Executive Officer, Ade Ayeyemi, positions PAPSS as a game-changer for intra-African trade payments.

In his keynote speech at the event marking the commercial launch of PAPSS on 13 January 2022, he said: “We have entered a new era. The growth will result in a prosperous Africa, one that will positively change the narrative of this continent, of rich culture, vast resources and resilient and hard-working people.”

The Africa we want is getting closer and will be hastened by the successful implementation of PAPSS. As the leading Pan-African institution, Ecobank Group, which already operates a payment switch across its network of 33 countries, will provide the necessary support to make this important initiative a huge success.