Decentralising PAPSS: Building a resilient Africa-owned cross-border payment system – MyJoyOnline


Efficient operationalization of the African Continental Free Trade Area (AFCTA), was beset with lack of a robust financial transaction platform.

The Pan-African Payment and Settlement System (PAPSS) launched last year, holds promise for African trading activities.

At the Kumasi Central Business District, Cynthia Drowaa has been operating a black soap factory for almost 2 decades.

The 14 by 14 factory floor has been producing the soap for 8 outlets in 3 regions of Ghana.

Recently, she received orders from Nigeria but supplying the wares has been a challenge.

As at November 2023, 2 of her new-found clients haven’t figured out how to send money to pay for her goods.

“They’ve been trying several ways to send money to me to no avail. Some platforms have been recommended to them but it hasn’t been successful,” she lamented.

For Abena Sabi, a clothing material seller at Adum in Kumasi, she always takes a trip Togo to deliver the money for her goods. This wears her down.

“I always have to carry the money and send it to them. A year ago, I was told of a platform I could make some transactions but it didn’t seem secured. Going to and fro is too tiresome,” she revealed. 

From an original group of six to now 28, the European bloc continues to attract neighbouring countries. With a GDP of more than €14 billion, the countries forge towards a single market.

The free circulation of goods underpins the EU’s market integration. It’s thought that as the countries trade and depend on each other, the less likely a conflict can arise.

Asia, too has other geo-economic alliances like the East Asia Free Trade Agreement (EAFTA), the Comprehensive Economic Partnership in East Asia (CEPEA), and the Association of Southeast Asian Nations (ASEAN).

ASEAN also has other free trade agreements such as those between Australia and New Zealand (AANZFTA, China (ACFTA), South Korea (AKFTA), India (AIFTA) and a Comprehensive Economic Partnership with Japan (AJCEP).

The AfCFTA is the world’s largest free trade area bringing together the 55 countries of the African Union (AU) and eight Regional Economic Communities (RECs). 

Despite the potential, Cynthia and Abena’s ordeals are major hurdles confronting the full realization of AFCTA.

CEO of the Ghana Chamber of Telecoms, Dr Ken Ashigbey believes an African-owned platform can do away with that challenge.

“We need to see how we can connect for the AFCTA to work. I should be able to send money to Niger. The government should set up an international exchange that is owned by Africans.

Decentralizing PAPSS

AfCFTA has been influential on the African banking space with the advent of the Pan-African Payment and Settlement System (PAPSS).

PAPSS is a centralised payment and settlement system that was launched by Afreximbank with the support of the AfCFTA Secretariat.

PAPSS is created to enable individuals, businesses and governments to make instant cross-border payments in over 40 different African currencies. It’s hoped that it’ll reduce the need for US dollars and other hard currencies and thereby simplify cross-border trade.

The Group Executive Director of AFCFTA Policy Network, Louis Yaw Afful, says he’s not surprised the traders have no idea how to transact on the platform.

“I wouldn’t be surprised if it hasn’t gotten to them. AFCTA hardly does decentralized programmes and some of the players have not gotten the message well.

He said, “If they’re not bankable traders, it’ll be very difficult for them to benefit from the PAPSS. If the traders have these banks, they don’t need to carry cross-border currency. All they need to do is to instruct their bankers and the recipients will receive in the resident currency,” he said.

He thus believes the banks should embark on financial literacy to assuage the situation.

EU and ASEAN in 2016 marked the 40th anniversary of their partnership.

They proclaimed, “Regional integration (is) the most effective way to foster stability, build prosperity and address global challenges.”

With a robust PAPSS, Africa can form such alliances and will therefore be in the position to harness the benefits of cross-border trade.

This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa and Co-Develop.

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