Key highlights:
- Adopting the PAPS system will depend on whether the currencies are stable.
- Right macroeconomic fundamentals and convergence, are key.
- Only about 100 out of 4,500 products listed under the tariff headings for AfCFTA were currently being traded under the platform.
The Economic Commission for Africa (ECA) said that the Pan-African payment system, which is supposed to remove the stress of cross-country exchange rate, will be properly adopted if the currencies of African countries are stable.
The ECA also noted that the system will work best if the countries have the right macroeconomic fundamentals and convergence.
This was disclosed by ECA’s Director of the Regional Integration and Trade Division, Stephen Karingi, at the 55th session of the Economic Commission for Africa in Addis Ababa, Ethiopia.
Pan-African payment and settlement system
Karinga said when functional it will allow countries to trade in their currencies as removes the stress of countries worrying about the cross-country exchange rate, however it needs stable macroecononomic fundamentals, he said:
- “In this case, the exchange of Naira to the dollar, Birr to the dollar or Naira. However, adopting the system will depend on whether the currencies are stable.
- “This is because if you do not have the right macroeconomic fundamentals and convergence, then it cannot work,”.
AfCFTA progress
He added he is impressed with the progress the implementation of the African Continental Free Trade Area (AfCFTA) has made on the continent, after three years of its inauguration.
- “We are in the trading stage where money is being made, and the private sector is taking advantage of the opportunity AfCFTA has offered.
- “For example, value-added coffee has been traded from Rwanda to Ghana. The coffee is traded by a company that supports women who produce coffee.
- “Batteries have been traded under the AfCFTA from Kenya to other African countries. Tea traded from Kenya to other African countries come from smallholder farmers, which confirms that the AfCFTA is improving livelihoods.
He added since 2022, trading under the AfCFTA is underway and is putting money in people’s pockets in an inclusive manner, which includes small-scale traders and women,
He warned that only about 100 out of 4,500 products listed under the tariff headings were currently being traded under the platform.
Future hurdles
Karingi said we have concluded the protocols that make the market function. And the investment policy, intellectual and property rights and competition policy have been endorsed, adding:
- “With intellectual property rights, countries can patent their products and extract more value. So far, 47 countries have ratified their instruments of the AfCFTA agreement.
- “About 46 countries have ratified and deposited their instruments of ratification, seven countries have signed but yet to ratify, and only one country is yet to sign.”
On requirements for trading, the director explained that countries were supposed first to sign the AfCFTA agreement, ratify the agreement and deposit the instruments of ratification.
“The second stage is for the countries to gazette the AfCFTA certificate of origin, gazette the tariff book so that the customs at the border can recognize these goods and the certificate of origin.
In case you missed it
Nairametrics reported earlier that The Securities and Exchange Commission (SEC) said that the implementation of the Pan-African Payment Settlement System (PAPSS) will encourage intra-African trade and aid diversification within the capital market.
This was stated by SEC’s Head of Office of the Chief Economist, Dr Okey Umeano, as The Nigerian Exchange and the Pan-African Payment Settlement System recently signed a Memorandum of Understanding to support cross-border payments across capital markets in Africa.
