Three Nigerian banks were among five African multinational commercial banking groups that signed a Memorandum of Understanding to embrace the pan-African Payment and Settlement System (PAPSS) new settlement model.
The five African multinational commercial banking groups include Access Bank, Ecobank, KCB, Standard Bank, and United Bank for Africa (UBA).
On Wednesday, PAPSS announced the signing of a Memorandum of Understanding (MoU) with the five bank Groups since June 19, 2023 at the opening ceremony of Afreximbank’s 30th Anniversary Celebrations and 30th Annual Meetings held in Accra, Ghana
PAPSS said the MoUs represent significant partnerships with the Groups aimed at revolutionising the settlement of cross-border transactions across Africa, leveraging on the vast network of subsidiaries and representative offices across major economic centres across Africa to promote Intra-African trade and financial transactions.
The signing of the MOUs were witnessed by the Heads of State and Prime Ministers from Africa and the Caribbean, Heads of continental policy and governance institutions as well as international institutions.
“The signature of these Memoranda signifies a monumental step forward in the pursuit of seamless cross-border trade payments throughout the almost 40 countries covered by these Banks.
“The broad collaboration between PAPSS and African commercial banks will pave the way for enhanced efficiency, transparency, and reliability in intra-African settlement.
“The adoption of PAPSS’s cutting-edge settlement model will streamline operations and empower businesses by providing a secure and technologically advanced platform for cross-border transactions,” PAPSS said.
As part of this partnership, the promoters of the new payment and settlement system said Access Bank Group, Ecobank Group, KCB Group, Standard Bank Group, and UBA Group would collaborate closely with PAPSS to ensure seamless integration of PAPSS into their existing operational systems.
This collaborative effort would include opening up all their African footprints for PAPSS, facilitating settlement of transactions, encouraging the participation of Fintech in PAPSS via the banks and expanding PAPSS to all the banks’ current digital channels, such as mobile application banking and e-banking platforms.
President of Afreximbank, Benedict Oramah, said “the signature of these MoUs marks a remarkable step towards the realisation of the aspirations of Africa’s foreleaders, who envisioned the creation of a payment and clearing union about six decades ago.
He said it also draws the banks closer to domesticating cross-border payments by enabling payments for cross-border trade in African currencies, while strengthening African currencies.
By leveraging on the vast continental coverage of these African commercial banks, he said PAPSS would seamlessly facilitate cross-border trade and payments and boost intra-African trade and investments.
The Secretary General of the AfCFTA, Wamkele Mene, said “the introduction of the new PAPSS Model for onboarding African Commercial Banks and the signing of the MoUs with the five African Commercial Bank Groups signifies a bold step towards the full operationalisation of PAPSS for the benefit of African traders and SMEs in the implementation of the AfCFTA Agreement.”
The Chief Executive Officer of PAPSS, Mike Ogbalu III, expressed enthusiasm about these collaborations, adding that “these partnerships with Access Bank Group, Ecobank Group, KCB Group, Standard Bank Group, and UBA Group marked a significant milestone in the journey toward a more integrated and efficient African banking landscape.
By embracing PAPSS’ Commercial Bank Settlement Model, Ognalu said these banks were helping to build a robust continental platform for fostering cross-border payments, thereby paving the way for financial inclusion and substantial continental economic development.
These MoUs, he pointed out, would be put into effect gradually in partnership with central banks in the countries where the five Group Banks operate.
He said customers of the banks in Africa would be informed through the usual channels of communication as soon as the service becomes available in their countries.
“PAPSS and the banks will be working towards making this service available towards year-end,” Ognalu said.
PAPSS is a centralised Financial Market Infrastructure that enables the efficient flow of money securely across African borders, minimising risk and contributing to financial integration across the regions.
PAPSS works in collaboration with Africa’s central banks to provide a payment and settlement service to which commercial banks and licensed payment service providers across the region can connect as ‘Participants’.
Afreximbank and the African Union (“AU”) first announced PAPSS at the 12th Extraordinary Summit of the African Union held on July 7, 2019, in Niamey, Niger Republic, therefore adopting PAPSS as a key instrument for the implementation of the African Continental Free Trade Agreement (AfCFTA).
Further, in its 13th extraordinary session, held on December 5, 2020, the assembly of the African Union recommitted and instructed the Afreximbank and the AfCFTA secretariat to finalise, among others, work on the PAPSS.
The 35th Ordinary Session of the Assembly of the AU further directed the AfCFTA and Afreximbank to deploy the system to cover the entire continent.
PAPSS was officially launched in Accra, Ghana, on January 13, 2022, making it available for use by the public.
