•Countries  to benefit from $3bn initiative –Oramah  …9 central banks joined PAPSS network –Ogbalu

By Chinwendu Obienyi

In its bid to connect payments and accelerate Africa’s trade by transforming and facilitating payment, clearing and settlement for cross-border trade across the continent, the Nigerian Exchange Limited (NGX) and African Export-Import Bank (Afreximbank)’s Pan-African Payment and Settlement System (PAPSS) signed a Memorandum of Understanding (MoU) on Tuesday.

This partnership is expected to stimulate an efficient payment system and enhance market liquidity – the current challenges in the securities and trade markets across the continent.

The President, Afreximbank, Benedict Oramah, made this known during the signing ceremony which held via Zoom. Oramah noted that the possibility of enabling efficient cross border payments across African Capital markets has now become a reality with PAPSS while adding that that what Afreximbank has done was to domesticate all African payments by supporting and backing the clearing and settlement with $3 billion.

“The dream is becoming a reality and it is coming at an opportune time. The fact is that we cannot promote investments in our securities market without looking at a structure at which cross border transactions can be integrated. 

We have a fragmented system and unless we take control of our capital, we cannot promote trade in a fragmented system and this is what we need to unlock and so I am happy with the PAPSS initiative as it will power the effective payment and settlement of cross border transactions”, Oramah said.

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The Afreximbank boss further said, “Our stock exchanges do not have liquidity while our airlines do not operate across Africa because the foreign currency to pay them is not there. So we decided to work with the Africa Continental Free Trade Agreement (AfCFTA) and the African Union Commission and Central Banks to put in place the pan African payment and settlement system which allows payment from West African trade in local currency”.

He assured that the bank will continue to provide investors with the possibility of using local currencies to buy securities across borders and added that Afreximbank will work with all stakeholders to ensure the PAPSS initiative records huge successes.

Also speaking at the ceremony, the Chief Executive Officer,PAPSS, Mike Ogbalu, announced that only 9 central banks have joined the PAPSS network while more than 50 commercial banks in Nigeria and seven switching companies have been onboarded into the platform.

“We expect more central banks to join and all intra African transactions are expected to pass through us now. We are on a journey gradually bringing us to the type of Africa we like, we think that this would support the implementation of the African Continental Free Trade Agreement (AfCFTA), create opportunities for the expansion of the continent’s capital markets and attract more investments in Africa. We look forward to more fruitful partnerships with the NGX”, Ogbalu said.

For his own part, the Chief Executive Officer, NGX, Temi Popoola, said, the continent has a growing number of financial institutions that can offer cross border trading but has challenges with trading with local currencies.

Popoola noted that the NGX’s partnership with PAPSS is a step to developing Africa’s capital markets while adding that the exchange is looking forward to the first announcement of cross border transactions done on the payment system.