Pan-African Payment and Settlement System (Papss), is a payment method that operates across African borders allowing the transfer of currencies instantly and at low costs. Its chief executive spoke to Bamuturaki Musinguzi about its achievements and prospects.
Why was the pan-African Payment and Settlement System (Papss) developed?
Over 80 percent of intra-African payments go through Europe or the US, resulting in high transfer and compliance costs. The establishment of the African Continental Free Trade Area (AfCFTA) has added to the need and urgency of providing an enabling continental payment and settlement infrastructure that will support its objectives. Papss was adopted in July 2019 by the African Union Heads of State to support the AfCFTA.
What has PAPSS achieved since its launch?
All six central banks of WAMZ (West African Monetary Zone) have been carrying out a pilot live exercise, which began in October 2021, and has been successfully concluded. This paves the way for commercial bank transactions. In the past few months, two more central banks and more than 300 major commercial banks have joined the PAPSS network.
In parallel, we signed strategic partnerships that broaden our reach — such as the Comesa Regional Payment and Settlement System and the Buna platform, the first Arab regional payment system.
This is in addition to partnering with AfricaNenda, with whom we work to build in-country capability for instant payments.
How is this system enabling instant payments in local currencies?
At its core, Papss is an instant payment system built to the highest global standards and then coupled with the systems of central banks. This is then coupled with the core systems of commercial banks, which will be direct participants in the Papss network. On top of this, we layer on other banks, fintech and payment service providers as indirect participants.
Payments are initiated and settled in the local currencies of initiators and beneficiaries, effectively eliminating the need for third (hard) currencies to consummate trades within our region.
National and sub-regional payment systems lack interoperability. It is paramount that we now integrate all of Africa financially to hasten the pace of economic growth.
Once it begins to operate at scale, PAPSS should save African countries an estimated $5 billion annually in transaction costs.
What has hindered expansion?
It will take an appreciation of the value that Papss is bringing in terms of speed, low cost and guarantee of receipt of funds by commercial banks and their being able to translate this to their customers doing cross-border transactions.