Kenya will host the electronic system that will support a bank network enabling cross-border payments across Africa. Speaking at the launch of AfCFTA’s Trade and Development Centre at the Strathmore University, President Ruto confirmed that the country had won the bid to host the Pan African Payments and Settlement System( PAPSS).
“Because we are leaders in the technology space and promoters of AfCFTA and any institution that supports the integration of our continent, we have gladly accepted to host the headquarters of pan-African payment system in Kenya.” stated President Ruto.
At the end of September this year, the then Cabinet Secretary, Ministry of Investments, Trade and Industry Moses Kuria announced that Central Bank of Kenya (CBK), had become the 10th African central bank to join PAPSS. PAPPS serves as a swift payment solution, facilitating seamless money transfers in local currencies. This allows users to send funds via any bank within the PAPSS network, and recipients can conveniently withdraw the equivalent amount in their local currency.
Notably, with Kenya hosting this electronic platform, traders across Africa gain the capability to conduct financial transactions in real-time. In a participating country, a trader has the capability to direct a local bank to make a payment to a supplier in another country using the supplier’s local currency. Subsequently, the trader’s bank transmits instructions to PAPSS to facilitate the real-time settlement of the payment through the supplier’s local bank in their own currency. PAPSS performs essential validation checks before forwarding the instruction to the recipient bank.
PAPSS Reduces Dollar Reliance
With PAPSS, there will be no need for local African currencies to be converted into other foreign denominations such as the US Dollar or the Euro. This conversion process has contributed to delay in financial transactions presenting a hurdle to intra African trade.
The platform is anticipated to result in savings of approximately Sh750 billion (equivalent to $5 billion) for the continent by reducing the expenses incurred by traders when converting their national currencies into a third currency.
At the Strathmore meeting, President Ruto also announced that the payment platform will be adopted by African Union’s Assembly of Heads of State and Government in February 2024.