The Nigerian Exchange Ltd. (NGX) and Pan African Payments Settlement System (PAPSS) have signed a Memorandum of Understanding (MoU) to integrate the payments system in a bid to boost cross-border securities transactions across African capital markets.
The MoU was signed in a virtual ceremony on Tuesday. The integration of PAPSS into the cross-border capital market framework is expected to fix issues with currency convertibility, reduce costs, shorten processing and settlement times, and foster access to capital.
- “We hope that the success of this partnership will inspire other African nations to integrate with PAPSS to enable other member countries to benefit from improved efficiency,” said Mr. Temi Popoola, Chief Executive Officer of NGX.
According to Mr. Abubakar Mahmoud, Chairman of NGX, investors would enjoy a more efficient and cost-effective way of investing in African securities. The development is expected to promote regional integration and boost trade flows.
- “The MoU would bring about more financial inclusion in the capital market operations. With the signing of this MoU with our strategic partner NGX, we expect more transactions to flow into our system,” said Mr. Mike Ogbalu, CEO of PAPSS.
The President of the African Export and Import Bank (Afreximbank), Prof. Benedict Oramah, noted that PAPSS was initiated as a recognition of the need to integrate payments for goods and services in Africa. Oramah said that the initiative came on board amid the implementation of the African Continental Free Trade Agreement (AfCFTA) and was a welcome development.
The Director-General of the Security and Exchange Commission (SEC), Mr. Lamido Yuguda, said that the signing of the agreement was a significant milestone in line with the revised Capital Market Masterplan. Yuguda added that SEC would support all initiatives to enhance the integrity and efficiency of the capital market.
Mr. Oscar Onyema, Group Chief Executive Officer of NGX Group, said the initiative came at the right time when Africa wants to accelerate the implementation of AfCFTA. Onyema said that the initiative would stimulate the development of intra-African securities trading.
The President of the African Securities Exchange Association (ASEA), Mr. Thalepo Tsheole, called on stakeholders to come together and ensure that the initiative is executed across Africa. Tsheole emphasized that using the umbrella of ASEA, with nine exchanges and a market cap of 1.5 trillion dollars, PAPSS could be instrumental to the African Exchanges Linkage Project.
What is PAPSS and why the integration?
Pan African Payments Settlement System (PAPSS) was launched by the African Export-Import Bank (Afreximbank) in 2019, with the aim of facilitating cross-border payments and settlements within Africa.
The platform is designed to make it easier for African businesses to trade with each other and reduce the continent’s reliance on international payment systems.
- The Nigerian Exchange Ltd. (NGX) is one of the largest stock exchanges in Africa, with a market capitalization of over $40 billion.
- The integration of PAPSS into the cross-border capital market framework is expected to promote regional integration and boost trade flows within Africa. It is also expected to make it easier and more cost-effective for investors to invest in African securities, and to increase financial inclusion in the capital markets.
- The signing of the Memorandum of Understanding (MoU) between NGX and PAPSS is seen as a significant milestone in the implementation of the African Continental Free Trade Agreement (AfCFTA), which aims to create a single market for goods and services across Africa.
- The initiative is expected to stimulate the development of intra-African securities trading and promote the growth of African capital markets.
How will the PAPSS work for Nigerians looking to invest in foreign markets?
The integration of PAPSS into the cross-border capital market framework is expected to facilitate cross-border securities transactions across African capital markets.
According to Mr. Temi Popoola, Chief Executive Officer of the Nigerian Exchange Ltd. (NGX), integrating PAPSS into the cross-border capital market framework would fix issues with currency convertibility, reduce costs, shorten processing and settlement times as well as foster access to capital.
The PAPSS platform is designed to make it easier for African businesses to trade with each other and reduce the continent’s reliance on international payment systems. By using PAPSS, Nigerians looking to invest in foreign markets will be able to make payments and settle transactions in their local currency, rather than having to go through the hassle of currency conversions and using international payment systems.
- This means that Nigerians looking to invest in foreign markets will be able to use the PAPSS platform to make payments and settle transactions more efficiently and cost-effectively.
- For example, when you buy stocks in Kenya, you pay in Naira but the settlement is made between the central banks of Nigeria and Kenya in the latter’s currency.
