In a significant development, Kenya has successfully secured the opportunity to host the Pan-African Payment and Settlement System (PAPSS) headquarters, a pivotal step towards enhancing intra-African trade and reducing reliance on the US dollar.
The Central Bank of Kenya joined PAPSS in October, becoming the tenth African central bank to participate in this initiative. The platform already boasts integration with central banks from Nigeria, Ghana, Liberia, Sierra Leone, Gambia, Zimbabwe, Djibouti, Zambia, and Guinea.
PAPSS, a digital platform conceived by the African Export-Import Bank, aims to streamline immediate payments across African borders in local currencies, thereby cutting down on transaction costs. Traditionally, intra-African transactions involving over 42 different currencies often required conversion into major currencies, predominantly the US dollar. This process incurred high fees and prolonged transaction times. PAPSS is poised to revolutionize this landscape, potentially saving businesses across the continent a substantial annual sum of $5 billion in transaction costs.
Dare Okoudjou, founder and CEO of Onafriq (formerly MFS Africa), emphasizes the positive impact of PAPSS on small and medium-sized enterprises, entrepreneurs, and traders. He notes, “By making cross-border payments affordable and easier, PAPSS gives them easier access to the formal payment services that will help them grow their businesses.”
The ambitious goal for PAPSS includes establishing formal connections with every commercial bank in Africa by the end of 2025. Presently, 28 commercial banks have committed to this initiative, with notable contributions from fintech firms like Interswitch and Onafriq as recognized strategic partners within the PAPSS network.