The Africa Export-Import Bank has included 11 African central banks in its Pan-African Payment and Settlement System (PAPSS), with plans for the rest to join by next year.
The information was revealed by PAPSS’s Deputy CEO, John Bosco Sebabi, in an interview with CNBC Africa.
According to Afreximbank, more than 80% of payments within Africa are currently routed through Europe or the United States.
This method is estimated to incur up to $5 billion in fees and compliance costs. It is noted that PAPSS, a collaboration with the African Union, will offer a new option where users can make transactions in their currencies, eliminating the requirement for a third-party currency such as the U.S. dollar.
The system’s main participants are central banks, functioning as regulators and clearance agents, alongside commercial banks, Fintechs, payment service providers, and their business customers throughout the region.
In January 2021, the African Union unveiled the Africa Continental Free Trade Agreement, which quickly gained widespread approval.
This move established the world’s largest and most recent trading bloc, forming a unified market with a combined GDP of $3.4 trillion for the continent’s 1.3 billion population.
Africa currently exhibits the world’s lowest levels of trade within the region, standing at approximately 18%, significantly lower than Europe’s 70% and Asia’s 59%.
Sebabi noted during the interview that transactions can be completed within 7-10 seconds, with a maximum of 120 seconds, promoting the development of trade within Africa.