About a month ago, the word was let out on a project storied to have been conceived in the stables of the African Union (AU). Under a partnership between the AU’s supposedly highly-coveted continental free trade bloc and a 27-year-old pan-African multilateral financial institution, a new kind of “African initiative” broke into existence.
To promote intra-Africa trade under the umbrella of the African Continental Free Trade Agreement and the Afreximbank, PAPSS—the two-year-old Pan-African Payment Settlement System—was made official region-wide.
Primarily the payments infrastructure for the AfCFTA, the settlement system is meant to make it easier for African countries to transact with one another regardless of their different, numerous currencies. On the surface, it’s about connecting Africa’s central banks, digitally.
Parts of the props for PAPSS talks up moving intra-Africa payments away from hard currencies, saving USD 5 Bn in annual payment transaction costs and as much as USD 3 Bn from Afreximbank’s coffers going into the implementation of the initiative. To make the system more scalable, the bank has already approved USD 500 Mn, though this amount went solely into the test phase in WAMZ.