A new continent payment system designed to strengthen African fiat currencies and facilitate intra-African trade has recently gone live. Discussions on adding more African countries are still ongoing.
SMEs are the main beneficiaries of the payment system
A new African payment system, the Pan-African Payments and Settlement System (PAPSS), recently went live in Ghana, setting the stage for its rollout across the continent. The payment system is designed to strengthen African fiat currencies and facilitate intra-African trade.
Payment systems – African Union, Afreximbank and African Free Trade Area – Attempts to reduce the dependence of African countries on the dollar. However, as Techcabal Report Note that only seven countries – all members of the West African Monetary Zone (WAMZ) – participated in the pilot phase.
Meanwhile, the same report suggests that small and medium-sized enterprises (SMEs) on the African continent are likely to be the main beneficiaries of the PAPSS system. It added that as more people start using the PAPSS system, it is estimated that it will save an estimated $5 billion annually in customs clearance and transaction costs.
These savings, in turn, will enable SMEs to scale, as Mike Ogbalu, CEO of PAPSS, explains.
“The commercial launch marks an important milestone in seamlessly connecting African markets. It will provide new impetus for businesses to scale up in Africa more easily and potentially save the continent over $5 billion in transaction costs annually,” Ogbalu noted.
Strengthen cross-border commerce
Just as Ogbalu insists the new payment system could help save the continent billions of dollars, Pamela Coke-Hamilton, executive director of the International Trade Centre, claims the new payment system will help the continent reduce the trade barriers SMEs face. The executive director explained:
ITC is helping businesses benefit from PAPSS, creating new growth opportunities for cross-border e-commerce and sustainable trade.
The Techcabal report indicates that discussions on joining other African central banks are still ongoing. The report also noted that with new payment systems, Africa has moved closer to a single currency for the entire continent.
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