The Secretary General of the African Continental Free Trade Area, Mr. Wamkele Mene, revealed that the Pan-African Payment and Settlement System (PAPSS) would save the continent the sum of $ 5 billion per year when will be operational.
The AfCFTA revealed this on Friday during the 2nd edition of the AfCFTA secretariat’s quarterly press conference, citing that the amount saved would be cumulative conversions into dollars, according to the Nigeria news agency.
He revealed that the project developed in partnership with the African Import-Export Bank (Afriexim Bank) would be ready by the end of 2021. He further stated that the system would resolve currency conversion issues for participating countries and create a clearing and settlement system for risk-controlled payments in intra-African trade, adding that Nigeria and 5 others have signed up for the pilot program.
What the Secretary-General says
“There is a goal that one day Africa will be a monetary union.
Converting the 42 or so currencies in Africa with its cost of over five billion dollars a year is a lot and so we want to reduce and eliminate that for trading purposes.
Local banks could switch to the platform as we are in consultation with central banks and by the end of the year we would be able to say that the platform is available for all African countries who wish spend there.
Afrexim Bank has invested over $ 1 billion and this is a strong signal that AfCFTA would work.
If you run a Small and Medium Business (SME) and you need to use a foreign platform for transactions, it is burdensome and expensive.
He added that Africa would be able to improve the efficiency and competitiveness of SMEs by tackling the constraints and costs associated with trade through the implementation of the payment settlement system.
“The rules of origin trade mechanism was 86% complete, although the secretariat was preparing for 90% completion before implementation. “ he said.
What you should know
- Nairametrics reported last month that AfCFTA is working on a pilot phase of the Pan African Payment and Settlement System (PAPSS) which is underway in six West African countries, to facilitate the implementation of the agreement.
- This week, the Central Bank of Nigeria (CBN) said it has a resilient payments system that is more than ready for the African Continental Free Trade Area Agreement.