The Vice President of Ghana, Dr. Mahamudu Bawumia, has urged African Central Bank Governors to connect their national payment systems to the Pan-African Payment and Settlement System (PAPSS) to boost trade on the African continent.
The Vice President, while delivering the keynote address at the launch of PAPSS in Accra on the theme: “Connecting Payments, Accelerating Africa’s Trade,” indicated that the successful implementation of PAPSS would enhance intra-African trade and ensure an efficient and transparent payment system.
According to Dr. Bawumia, PAPSS is expected to benefit all stakeholders from governments, banks, payment providers, customers, corporates, small enterprises and individuals.
The Vice President averred that the speed, simplicity and security of the PAPSS process would greatly improve the capabilities of the participating countries, and increase access to new African markets with less costly foreign exchange complications.
Vice President Dr. Bawumia expressed optimism that with the rolling out of PAPSS, governments and African Central Banks would witness less pressure on foreign exchange liquidity and greater transparency in cross-border transactions. He added that Africa would also experience an increase in potential to generate revenue, as well as ease customers’ burden and enhance trade facilitation.
“As you are all aware, the underlying motive behind our integration scheme is the expectation that, through collaborative efforts, participating countries in the integration programmes would generate maximum socio-economic benefits for their citizens in the sub-region.
“Regional integration, undoubtedly, is an efficient tool for overcoming the constraints imposed by the nature and size of individual national markets.”Dr. Mahamudu Bawumia
Problems Hampering Intra-Africa Trade
The Veep observed that if the production of goods and services are carried out in an enlarged regional economic space, there is a greater chance of achieving substantial economic benefits.
The Vice President disclosed that 55 African countries currently have 42 currencies and four exchange rate systems. This, he said, is characterized by lack of currency convertibility and ill-liquidity, which often discourage intra-African trade. He thus, hoped that the new payment platform will help to address some of these challenges.
Over the years, there have been tremendous pressure on Africa Central Banks to develop domestic payments systems such as: Real-Time Gross Settlement, Automated Clearing House, Securities Settlement System, Automated Check Processing System and a National Switch.
Notwithstanding the significance of the intra-African payment systems, Dr. Bawumia noted that the intra-African payment system is fraught with various challenges, including: cost, access, speed and transparency.
PAPSS To Help Save Billions
PAPSS is a cross-border financial market infrastructure, instantly connecting payment transactions across Africa.
Its implementation is expected to save Africa five billion dollars in transaction costs annually.
It is designed to enable leading-edge technology by African banks, payment service providers and other financial market infrastructure to make instant and secure payments between African countries.
The system was designed and facilitated by the Africa Export-Import Bank (Afreximbank), the African Union Commission and the African Continental Free Trade Area (AfCFTA) Secretariat as well as Africa Central Banks.
It allows for instant payments by both originators and recipients to transfer and receive cash in their local currencies anywhere in Africa.
It would simplify the historical complexities and costs of making payments across Africa’s borders and provide operational efficiencies that open up vast economic opportunities for African economies.