A Pan-African Payment and Settlement System (PAPSS) that would facilitate transactions under the African Continental Free Trade Area (AfCFTA) is to be operated by African Export-Import Bank (AFREXIMBANK), the bank announced in Cairo, Egypt on Monday.
The system to be operated in collaboration with the AfCFTA Secretariat was unveiled at the signing of a Memorandum of Understanding (MoU) with BUNA, the Arab Monetary Fund (AMF)-owned cross-border and multi-currency payment system.
To ensure effective operation of the system among payment systems to enhance cross-border payments, the bank said technical, process and business system compatibility is required so that end users can seamlessly transact with each other across systems.
This collaboration, AFREXIMBANK said, lays the foundation for the operation of the system between PAPSS and BUNA payment systems.
PAPSS is a centralized Financial Market Infrastructure that enables the efficient flow of money securely across African borders, minimizing 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 launched the 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 on December 5, 2020, the AU assembly recommitted and instructed the AFREXIMBANK and the AfCFTA secretariat to finalize among others, work on the Pan-African Payments and Settlements System (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.
BUNA is the cross-border payment system owned by the Arab Monetary Fund and aiming at enabling financial institutions and central banks, in the Arab region and beyond, to send and receive payments, in local currencies as well as key international currencies, in a safe, cost-effective, risk-controlled and transparent environment. BUNA offers participants modern payment solutions that comply with the highest international standards of information security and requirements against financial crime. With its cross-border payment solution, BUNA increases opportunities for economic and financial integration in the Arab region and strengthens investment ties with the global trading partners. Buna welcomes the inclusion of all banks that meet the eligibility criteria and conditions for participation.
With the system, participants would be able to make fast, secure and affordable transactions in their local currencies between the African continent and the Arab region.
Apart from signing significant strategic alliances with other key institutions, PAPSS said it was aggressively expanding its footprints across Africa with eight central banks, six switches and about 25 of the largest commercial banks on the continent.
By joining PAPSS, the facilitators said banks across the regions would enable their customers to trade within Africa.
“Each bank joining PAPSS will have access to tens of thousands of end-users already connected across the platform’s growing community of financial institutions. Central banks joining the PAPSS infrastructure extends the collective reach of the payment system to millions more, with the resultant positive impact on intra-African Trade,” the facilitators said at the agreement signing ceremony.
“The collaboration between PAPSS and BUNA would further the benefits to the BUNA network and vice versa.
Together, we will create the foundational support for the innovation of trade and payment solutions which will significantly enhance the economy of both regions,” they added.
PAPSS also plans to collaborate with other regional and continental cross border payments systems to extend its range beyond the African borders to support the growth of trade and investments with the African continent.
President and Chairman of the Board of Directors of AFREXIMBANK and Chairperson of PAPSS Management Board, Benedict Oramah, said:
“The MoU with BUNA is another important step that PAPSS has taken after its commercial launch. The Arab World and Africa have a long history of trade relations and the PAPSS-BUNA partnership will further facilitate the growth of trade between the two regions.
“The integration will provide banks across Africa and the Arab World with a seamless and one-stop center to help their clients transfer value to their counterparts in either region. As chairperson of the Arab-Africa Trade Bridges (AATB), I am very proud of this outcome and thank the Arab Monetary Fund, Badea and the Islamic Trade Finance Company (ITFC) for their strong partnership.”
The Director General and Chairman of the Board of the Arab Monetary Fund, Abdulrahman A. Al Hamidy,said:
“We highlight the important role of Afreximbank and the AMF in leading strategic initiatives that can strengthen the economic ties between the Arab region and the African continent and support the global efforts to promote financial inclusion and improve access to appropriate financial services. Buna’s success to establish interoperability with regional market infrastructure like PAPSS is another key milestone in Buna’s continuous efforts to expand its regional and global network and increase the value it brings to its participants.”
The CEO of PAPSS, Mike Ogbalu III, said: “PAPSS, being Africa’s premier continent-wide payment rail, specifically designed to transform trade on the continent, is focused on the impact and not on short-term commercial benefits. PAPSS has been able to strike a balance between these objectives and ensuring that commercial value is not destroyed for its stakeholders.
“Sustaining this impact focus in its collaboration with Buna will have a dramatic impact on trade between Africa and the Arab world, and this is very exciting.