Afreximbank is playing a crucial role in Africa’s efforts to create a single African market through AfCFTA.The PAPSS will release Africa from the traditional reliance on hard currencies in regional trade payments leading to a saving of more than Sh500 billion in payment transactional costs per annum for Africa. Currently, cross-border payments in Africa typically involve a third currency, such as the US dollar or euro, making the transactions slow and expensive. According to sources, only the trade deficit between countries will be settled using dollars. In addition to the PAPSS, the Afreximbank proposes to institute a US$1bn AfCFTA adjustment facility to “enable countries to adjust in an orderly manner to sudden significant tariff revenue losses” as a result of the implementation of the agreement, the bank stated.
The African Union extraordinary summit on July 7 in Niamey, Niger Republic witnessed the historic launch of continent-wide digital payment system to facilitate payments for goods and services in local currencies. Afreximbank President Benedict Oramah informed the 12th Extraordinary Summit of African Union (AU) Heads of State that the Pan-African Payment and Settlement System (PAPSS) will enable each African country to use its own currency in any transaction. The PAPSS is a critical factor for the smooth implementation of the African Union’s success in AfCFTA. The AfCTFA agreement has now been signed by 54 of the 55 African Union nations, and ratified by 27.However, there are still many outstanding issues particularly tariffs and rules of origin. Member countries have yet to decide on which sectors to protect and which to open.
Previously, Afreximbank had collaborated with the West African Monetary Institute to evolve a solution in the six West African countries.
