The Vice President, Dr. Mahamudu Bawumia, has lauded the coming into being of the Pan-African Payments & Settlement System (PAPSS), a cross-border, financial market infrastructure, instantly connecting payment transactions across Africa.
It is designed to enable leading-edge technology African banks, payment service providers and other financial market infrastructure to make instant and secure payments between African countries.
According to Dr. Bawumia, PAPSS, which is aimed at eliminating the need to make payments through third-party banks usually located outside the continent, is the most important success story when it comes to payment system integration for Africa.
He said that the System is simply an African solution to African problem emphasizing that Africans must be excited about it latest achievement.
“In my humble opinion, PAPSS is an African solution to an African problem and it is the most practical and most important achievement, in payment systems integration on the African continent since independence from colonial rule.
We as Africans, should be very proud of this historic feat which demonstrates how the application of digital technology can solve many problems we are facing individually and collectively”, he said.
The System will offer the platform for member states to transfer money within Africa on the same day at a lower cost and this is expected to enhance the businesses of many especially exporters and importers as it will offer a safer, secure transfer and faster funds.
Dr. Bawumia added “Businesses and traders would no longer have to spend days waiting for the confirmation or receipt of funds to facilitate trade as payments will be cleared and settled in real-time. It provides a simplified process that reduces the costs and complexities of foreign exchange for cross-border transactions between African markets.
The biggest beneficiaries of PAPSS will be small and medium –sized businesses, investors who make high-valued payments across the borders and consumers who have been using informal means to make cross-border payments”.
The vice-president, who said this at the launch of PAPSS last Thursday January 13, 2022, in Accra called on the various Central Banks to facilitate the plugging-in of their switches into PAPSS, to speed up its roll-out across the continent to complement ongoing efforts to increase intra-African trade.
Delivering the keynote address on behalf of President Akufo-Addo, Dr. Bawumia, said “Today’s commercial launch of the PAPSS is the result of many months of hard work, dedication, resolve, and an unwavering commitment to meet the set objective.
I am pleased to note that PAPSS has demonstrated credibility through its successful pilot and proof of concept in the West African Monetary Zone (WAMZ), which provided the appropriate context – multi-lingual, multi-currency, multi-regulator, etc as anticipated in the larger African context”.
“The next step, and to be the next logical, critical step, is for African Central banks to ensure the plug-in of their national switches into PAPSS, to speed up its adoption and use across the continent.
PAPSS’s continent-wide roll-out would be faster and more cost-effective if Central banks are plugged into the system, bringing along all the banks under their oversight, and ensuring uniformity in the use of this innovative system,” he added.
The commercial launch of PAPSS which brought together several players on the continent including former heads of state, ministers, fintech, is designed to enable leading-edge technology African banks, payment service providers and other financial market infrastructure to make instant and secure payments between African countries.
Chief among them were the Nigeriens former President, leader and champion of AfCFTA Mahamudu Ossoufou, Nigeria’s former President Olusegu Obasanjo, Finance Minister, Ken Ofori-Atta, Trades and Industry Minister, John Alan Kyeremanteng, Governor of the Bank of Ghana (BoG) Ernest Kwamina Addison, Chief Executive Officer of PAPSS, Mike Ogbalu, Secretary General of the AfCFTA Secretariat Wamkele Mene, Chairperson of the African Union Commission (AUC) Faki Mahamat among others.
The System was designed and facilitated by AFREXIH BANK, African Union and the African Continental Free Trade Area (AfCFTA) Secretariat headquartered in Accra.
It allows for instant payments by both originators and recipients to transfer and receive cash in their local currencies anywhere in Africa.
Dr. Bawumia particularly tasked the officials of Afrexim bank and the African Continental Free Trade Area (AfCFTA), lead promoters of PAPSS saying “It is my understanding that through the Association of African Central Banks (AACB) Payment Systems Task Force and its working groups, work has commenced on a collection of base facts on legal and regulatory frameworks of African payment systems.
You need to quicken the pace on this effort and also ensure that all central banks are carried along during this critical phase of the implementation of a regional integrated payment platform”.
PAPSS, is expected to benefit all stakeholders from governments, banks and payment providers to the end customers, corporates, small enterprises and individuals.
The speed, simplicity and security of the process greatly improves the capabilities of the participants, increasing access to new African markets with less costly foreign exchange complications.
Per this initiative, governments and central banks will see less pressure on foreign exchange liquidity and greater transparency of cross-border transactions, increasing potential to generate revenue, as well as ease customers’ burden and enhance trade opportunities.
PAPSS, is 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.
It was developed and initiated through a collaborative efforts of the AfCFTA Secretariat, Afrexim bank and the AUC working together with West Africa Monetary Institute and associated central banks in the West Africa Monetary Zone.
It is designed to ensure instant payments for goods and services between African jurisdictions, payments are initiated and settled in the local currencies of initiators and beneficiaries effectively eliminating the need for third currencies to consummate trades within the region.
PAPSS was started in 2016 with various engagements to understand the existing payment systems, their pros and cons and how best to approach the establishment of an African-wide payments infrastructure.
Chief Executive Officer of PAPSS Mike Ogbalu, in his welcome address reiterated the fact that the System was not designed to compete with or replace the existing payment systems.
He said, it was rather tailored to operate to facilitate the connectivity at a continental level that brings all payment systems together into one network that is interoperable, efficient and affordable. “PAPSS was designed to make our currencies regain value and to domesticate intra-Africa payments”, he said.
The PAPSS CEO, implored all participants in the System and the general public to have “faith and trust in the integrity of the System”.
In all, some six Central Banks were tested and went through the trial operations.
In August 2021, all the Central Banks became live on the System and have since been sending through live transactions across the WAMZ region. Subsequently, some twelve commercial banks and four payment switches, have signed up while engagements with other Central Banks in Africa, have commenced focusing on regional payment systems to ensure bulk connection.
Mr. Ogbalu said with every bank onboard to PAPSS, it will enable thousands of their clients to trade within Africa. With this, every bank joining PAPSS will gain access to trade with tens of thousands of end-users already connected through the growing community of financial institutions.
“Every Central Bank joining the PAPSS infrastructure extends our collective reach to million 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 Ogbalu said.
He therefore called on all the other Central Banks outside the WAMZ to join and ensure PAPSS services are extended to other countries and made available for use by all Africans to facilitate payments for goods and services across the continent.
