The Secretary-General of the Africa Continental Free Trade Area, Mr Wamkele Mene has revealed that the Pan-African Payment and Settlement System (PAPSS) would save the continent the sum of $5 billion annually when operational.
The AfCFTA disclosed this at the 2nd edition of the AfCFTA secretariat quarterly press briefing on Friday, citing that the saved amount would be accruals from conversions to dollars, according to the News Agency of Nigeria.
He revealed that the project being developed in partnership with the African Export-Import Bank (Afriexim Bank), would be ready by the end of 2021. He further stated that the system would address the currency conversion challenges for participating countries and create a low cost and risk-controlled payment clearing and settlement system under intra-African trade, adding that Nigeria and 5 others have signed up for the pilot scheme.
What the Secretary-General is saying
“There is an objective that one day, Africa would be a monetary union.
Converting the about 42 currencies in Africa with its attendant cost of over five billion dollars yearly is a whole lot and so we want to reduce and eliminate this for the purpose of trading.
Local banks would be able to switch to the platform as we are in consultation with the central banks and by the end of the year, we would be in a position to say the platform is available for all African countries that want to switch to it.
Afrexim Bank has invested over one billion dollars and it is a strong signal that the AfCFTA would work.
If you run a Small and Medium Enterprise (SME) and you have to use a foreign platform for transactions, it is constraining and costly.”
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He added that Africa would be able to enhance the effectiveness and competitiveness of SMEs as it addresses the constraints and costs associated with trade through the implementation of the payment settlement system.
“Rules of Origin mechanism of trade was at 86 per cent completion, even though the secretariat was gearing for 90 per cent completion before application,” he said.
What you should know
- Nairametrics reported last month that AfCFTA was working on a pilot phase of the Pan-African Payment and Settlement System (PAPSS) which is ongoing 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 payment system that is more than ready for the African Continental Free Trade Area Agreement.