New payment system strengthens commercial connections in Africa

 Luanda - The creation of the payment system in the African continent for fast and less costly financial processes will strengthen trade links and create value chains at the level of the region, Angola’s minister of Industry and Trade, Victor Fernandes, said Friday.

In addition to strengthening trade links and creating value chains, the Angolan minister said, the continental payment system will also intensify regional financial markets.

 

Speaking at a high-level seminar on the Pan African Payment and Settlement System (PAPSS), Victor Fernandes stressed that the system will have the potential to secure African economies the convertibility of their currencies and accelerate regional market development.

 

The Angolan official added that for this aim to be achieved a uniform functional system should be adopted in which banks and other financial institutions play central roles being the main providers of financial services and instruments. 

 

Victor Fernandes added that taking into account that the "PAPSS", like any other payment system, will have economic operators as its main users, the procedures linked to the adopted financial instruments should be as simplified and transparent as possible. 

 

"On the market infrastructure side, we must also ensure the standardization of regulatory procedures with the adoption of commercial documents aimed at facilitating trade and mitigating associated risks across borders, which will allow predictability for economic operators," Mr Fernandes said. 

 

Victor Fernandes underscored that the quality of the systems play a fundamental role for the processes to be swift, effective, and in scale, and that it is important to be aware of the enormous challenge of the digitalization process of our economies.

 

The system, the Angolan minister said,  would only work if, from the point of view of transactions, the time and speed of concrete transactions occurred or could be accelerated. Adding that today, if I want to buy a product in Congo it takes more or less 14 days for the financial transaction to take place, because we have to convert our currency into the currency of other countries, a situation that will change with the system.

 

The minister said he hopes to see an African financial system robust and consolidated to the point of firmly supporting the efforts of regional integration and industrialization made at regional economic communities or at the level of the Free Trade Area of the Continent.

 

The board director of the National Reserve Bank of Angola (BNA), Rui Minguês, on his turn, said he believes that the system will allow important gains in productivity, reducing costs of transactions between countries of the African continent.

 

"We’ll encourage the Angolan banking system and the system operator to participate in the dialogue with these platforms so that Angola can be an outstanding country in this process," the Angolan Central Bank official said.

 

In the meantime, the secretary-general of the African Continental Free Trade Area, Wamkele Keabetswe Mene, said the system will improve the access to integrate small and medium enterprises in the continental market and the cost of trade.

 

PAPSS director, Mike Ogbalu, said it is a purely African payment and settlement system that will help reduce transactional waste on the continent.

 

The Pan African Payment and Settlement System (PAPSS) is a visa-like platform that saves more than five billion dollars in payment transaction costs per year.

 

After a successful pilot experience in the West African Monetary Zone, the Pan African Payment and Settlement System, a kind of Visa developed by Afreximbank - African Export-Import Bank for the African Continental Free Trade Area, is ready to go further beyond.

 

Officially launched on July 7, 2021, in Niamey, Niger, at the 12th Extraordinary Summit of the Assembly of the African Union, the PAPSS having started operating in January this year, is a continental platform that allows instant and cross-border payments in local currencies between African markets and will save more than five billion dollars in payment transaction costs per year.

 

The system is a revolutionary financial market structure that will boost intra-African trade and support the implementation of the AfCFTA by simplifying cross-border transactions and reducing reliance on strong currencies in these transactions.