Nigeria and other African countries expect to see robust trading, low-cost and seamless transactions under the AfCFTA as 12 banks and four switching companies have been onboarded into the Pan-African Payment and Settlement System (PAPSS), Mike Ogbalu, CEO said Thursday.
The names of the banks were not available at the time of filing in this report. However, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), and Ade Ayeyemi, CEO of Ecobank Transnational Incorporated (ETI) told BusinessDay that more banks and switching companies were being encouraged to sign up to PAPSS.
A Pan-Africa payment and settlement system will be the enabling infrastructure to spur the growth of intra-African trade and commerce, with the active participation of central banks, financial institutions, regional economic communities, private sectors, and other stakeholders, he said.
PAPSS is expected to save the continent more than $5 billion in payment transaction costs each year.
“With every bank onboarded to PAPSS, it will enable thousands of their clients to trade within Africa,” Ogbalu said.
He said every bank joining PAPSS gains access to trades with tens of thousands of end-users already connected through its growing community of financial institutions. Every central bank joining the PAPSS infrastructure extends collective reach to millions more with the resultant positive impact on intra-African trade.
“Together, we will create the foundational support for the innovation of trade and payment solutions which will help the continent solve uniquely African challenges,” he said.
The PAPSS pilot in WAMZ central banks has been completed and all six central banks have tested and gone through the trial operations, he noted. In the last week of August 2021, all the central banks became live on the system and have since been sending through live transactions across the WAMZ region.
On the journey so far, Ogbalu said the project started in 2016 with various engagements to understand the existing regional payment systems, their pros, and cons and how best to approach the establishment of an Africa-wide payments infrastructure. Engagements took place with regional economic communities, including COMESA, East African Community, and SADC, as well as with all major payment systems operators in Africa. Furthermore, discussions with the West African Monetary Zone (WAMZ) commenced in 2017 and following successful interactions with them, the central bank governors of the zone agreed to implement a pilot scheme of the system as a proof of concept.
Subsequently, systems development commenced as well as the development of the regulatory framework including the PAPSS Bye Law, scheme rules and membership agreements and other establishment structures required for instituting the system.
Wamkele Mene, secretary-general, AfCFTA Secretariat, said since the commencement of trading under the AfCFTA began on January 1, 2021, significant improvements have been recorded in other key aspects of the implementation of the agreement.
These include an increase in the number of AfCFTA state parties from 35 (64%) in December 2020 to 39 (73%) at the end of last year; improvement in the agreement on the AfCFTA rules of origin from 81.8 percent to 88.6 percent; activation and operationalisation of the Dispute Settlement Body (DSB), a key pillar in the successful implementation of the agreement, in April.
The Appellate body is also being constituted; and successful hosting of the second edition of the IATF in Durban, South Africa, in November 2021, where a record $ 42.1 billion trade and trade-related deals were agreed, among others.
Emefiele said the CBN would facilitate the widespread adoption, acceptance and implementation of PAPSS.
“The CBN will ensure that financial institutions under its jurisdictions embrace PAPSS as we confidently recommend it to businesses across Nigeria. I call on everyone to support this laudable initiative and jointly make it a success “, he said.