Expert: How Africa’s Central Banks Will Facilitate Cross-border Payment, Trade, Investment within Africa
Emma Okonji
The Chief Executive Officer of Pan African Payment and Settlement System (PAPSS), Mr. Mike Ogbalu III, has stressed the role of Central Banks on the African continent, in facilitating trade and investment flows within Africa, which according to him, will enhance the use of African currency for cross-border payments.
Ogbalu III, in a statement, while reacting to the recent expansion of PAPSS to include Tunisia’s Central Bank, known as Banque Centrale de Tunisie (BCT) into its network as its thirteenth Central Bank member, said the expansion would further strengthen PAPSS’ commitment to promoting seamless cross-border payment services and enhancing financial integration across the African continent.
According to him, “We are thrilled to welcome Banque Centrale de Tunisie as our thirteenth member and first Central Bank in North Africa. Their inclusion highlights the growing recognition of PAPSS’s transformative role in simplifying cross-border payments on the continent. As PAPSS continues to expand its membership base, we are encouraged by the commitment of central banks in facilitating trade and investment flows within Africa. This represents another step towards realising our collective aspirations for an integrated African market.”
Financial experts in Nigeria had before now, complained about the increasing popularity of the dollar against the naira, as merchants continue to carry out cross-border payments in foreign currencies, especially in dollars, to the detriment of the naira and other African currencies.
Worried by the development that has continued to weaken the African currencies, the African Export-Import Bank (Afreximbank) in collaboration with the African Union (AU) and the African Continental Free Trade Area (AfCFTA) Secretariat, in 2022, launched the Pan African Payment and Settlement System (PAPSS), to promote seamless cross-border payment services and to enhance financial integration across the African continent.
PAPSS therefore facilitates realtime settlement of intra-African trade and payments in African currencies across the continent. By uniting central banks from across Africa, PAPSS seeks to address the existing challenges faced by African businesses and individuals in accessing efficient and cost-effective cross-border payment services.
“PAPSS has steadily expanded its footprint in Africa, now establishing itself in four regions. This network includes 13 central banks, with six in the West African Monetary Zone (WAMZ) region (Nigeria, Ghana,
Guinea, Gambia, Liberia, and Sierra Leone), three in East Africa (Kenya, Rwanda, and Djibouti), three in Southern Africa (Zimbabwe, Zambia, and Malawi), and one in North Africa (Tunisia). Additionally, it is anticipated that more central banks will join the platform throughout the current year,” Ogbalu III further said.
As a centralised Financial Market Infrastructure (FMI) that enables the efficient flow of money securely across African borders, minimising risk and contributing to financial integration across the regions, PAPSS works in collaboration with Africa’s central banks to provide a payment and settlement service to which commercial banks and licensed payment service providers across the region can connect as participants.
Announcing the entry of Banque Centrale de Tunisie (BCT) into its network, as its thirteenth Central Bank member, Executive Vice President of Afreximbank, Dr. George Elombi, said: “At Afreximbank, we have unwavering confidence that PAPSS will revolutionize the payment landscape within Africa, ultimately benefiting our people. We extend our heartfelt gratitude to Banque Centrale de Tunisie for their trust and decision to join the PAPSS network, as it signifies a significant step towards achieving our shared goals.”