ABUJA, NIGERIA--A pan African payment and settlement system established to anchor intra-African trade is projected to have 30 African central banks on the platform by year-end, amid interest, its chief executive officer said on Thursday.
The Pan African Payments and Settlement System (PAPSS), backed by 16 African central banks, is a real-time settlement platform designed to facilitate cross-border payments in African currencies and boost intra-African trade.
Mike Ogbalu, PAPSS chief executive officer, said there is interest from Central and West African countries to join the platform.
“We believe that before the end of this year, we should be talking about 30 countries with over 500 million bank accounts aggregated on our platform,” Ogbalu said.
The platform has been making inroads since it was launched in 2021 to save the continent from transaction costs. It is estimated that PAPSS would save Africa US$5 billion annually in transaction costs.
The expansion of the platform seeks to mitigate liquidity constraints and
enhance the efficiency of trade within the continent. The African Currency Marketplace, a component of PAPSS, successfully facilitated transactions involving 12 currencies during its pilot phase.
Settling intra-African transactions directly in local currency would eliminate multiple conversions, reduce reserve requirements, and shorten settlement lags.
PAPSS now links 16 central banks and 150 commercial banks, settling local currency trades in seconds. It is projected to shrink transaction costs by up to 50%, according to the International Trade Commission.
As of last month, six Zimbabwean commercial banks were live on the platform. These include African Century, NMB Bank, POSB, BancABC, Empower Bank and National Building Society. The platform was in the process of onboarding CBZ Bank, ZB Bank and AFC Commercial Bank.
There are 42 national currencies on the continent and access to hard currencies required to transact across borders is limited, with intra-regional payments taking 2 to 14 days to complete.
Under the PAPSS system, payment will be completed within two minutes.
