Mrs Elsie Addo Awadzi, the Second Deputy Governor of the Bank of Ghana (BOG), has called for reforms in payment systems to tackle the financing gap among African countries to boost long-term competitiveness on the global market for robust macro-economic recovery and medium to long term investment.

According to the Second Deputy Governor, financing remains a big challenge for the continent as the estimated financing gap for Africa, which stands at about $285 billion, keeps widening.

“This financing gap will require tough reforms such as, mobilising additional domestic revenue through taxes and other non-tax revenues, enhancing the efficiency of public spending for health and related sectors and strengthening the financial systems of the region.”
Mrs Elsie Addo Awadzi

Mrs Awadzi noted that improving governance and the business environment is key for promoting investment climate that would attract the needed capital flow. She, therefore, called for bold steps to harness strategic opportunities that would help economic recovery efforts on the continent. The steps, she intimated, would require intensifying efforts at regional trade and harnessing the potential of the youthful population, which she described as a great asset for socio economic future.

Investment Needed in AfCFTA Market

Mrs Awadzi called for increasing trade volume in the AfCFTA market to close the financing gap. This, she said, would require large investment to expand production and processing capacity in key value chains and infrastructure that would support logistics in terms of delivery of goods and services, as well as payments.

“With trading under the region having commenced in January 2021, concrete steps need to be taken to expand production, delivery, and payment channels to promote regional trade, investment, and growth.

“Technology can serve as an efficiency input in the development of payment and settlement systems and in respect to our economy by virtue of efforts to formalise and digitise economic activities away from the informal sector to the formal sector.”
Mrs Elsie Addo Awadzi

Pan African Payment and Settlement System

The Second Deputy Governor asserted that digitisation would make it easy for harnessing and tracking transactions on the regional market through the centralised Pan African Payment and Settlement System (PAPPS) designed by the Afreximbank to lower cost and accelerate transactions.

Dr Settor Amediku, Head of Payment Systems, BoG, disclosed that other payment systems rely on corresponding banks outside the continent, which also operated using currencies outside the continent.

Dr Settor Amediku indicated that aside from increasing the demand for foreign currencies, the rigidities and complexities of such systems tend to deprive the continent of the needed independence to manage its financial systems. He explained that dependence on the foreign currencies at times has countries suffering from harsh sanctions from the foreign countries. “Another problem is we have fragmented payment systems, and our payment systems are not linked”.

Ms Monica Oraro, Head of Product and Business Development, PAPSS, also said that “ultimately countries will be more reliant on their local currency, and we will be beefing up their reserves.”