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.

African Union praises role of Angolan head of State

 Luanda – Angolan president’s commitment to peace and reconciliation in the African continent was highlighted by the Committee of Permanent Representatives (COREP) of the African Union (AU) in Addis Ababa (Ethiopia)on on Thursday.

COREP praised the brilliant and effective way in which João Lourenço led the work of the Humanitarian Extraordinary Summit and Donor Conference, as well as the extraordinary meeting on Terrorism and Unconstitutional Changes of Government in Africa.

COREP members highlighted the way in which the Angolan statesman conducted the sessions, due to the unavailability of his Senegalese counterpart, Macky Sall, chairperson of the AU.

The initiative contributed to the success of the two continental events, which took place in Malabo (Equatorial Guinea) on the 27th and 28th of May.

At the last AU Summit, President João Lourenço was designated “Champion/Promoter for Peace and Reconciliation in Africa”.

This was due to his engagement in the search for increasingly participatory and inclusive forms of governance that contribute to the dissemination of a national culture of peace, as well as pacification on the continent, especially under the International Conference on the Great Lakes Region (ICGLR).

As the AU Champion for Peace and Reconciliation, the Angolan statesman is responsible for leading the mobilisation of political support and cooperation from Member States, as well as to move forward the international support so that greater priority is given to the prevention, management and resolution of conflicts in Africa.

In order for the continent to occupy an increasingly dynamic and assertive position in the global arena, the Heads of State and Government started to designate some of their peers to be AU Champions in specific and strategic thematic areas with the aim of promoting peace, stability, growth and development, fundamental bases for achieving Agenda 2063.

Speaking at the COREP session, the Permanent Representative of Angola to the AU, Francisco José da Cruz, thanked the Member States for having supported the country's proposal, presented in February 2020 for the holding of the Extraordinary Summit on Terrorism and Unconstitutional Changes of Government in Africa, as well as for the active participation in the event.

Francisco José da Cruz also underlined the support provided by the AU Commission for the implementation of the decision of the Heads of State and Government for the Summit to take place, especially the President of the Commission, Moussa Faki Mahamat, and the Commissioner for Political Affairs, Paz and Security, Ambassador Bankole Adeoye.

The diplomat also praised the authorities of Equatorial Guinea for having hosted the Summit and created working conditions so that it had the success recognised by the participants.

Likewise, he reaffirmed Angola's commitment to contribute to the implementation at African level of two strategic AU themes (peace and reconciliation) to achieve the silencing of weapons on the continent.

Kenya Cancels Eurobond Sale, Blames Surging Yields, Local Media Report

 Kenya has cancelled the sale of a 115 billion shilling ($982 million) Eurobond and will instead borrow from commercial banks after the Russia-Ukraine war caused yields to surge on international markets, local media reported on Friday.

Kenya said in January it would issue a new sovereign bond for the 2021/22 (July-June) financial year to partly plug a 7.5% budget deficit.

Finance Minister Ukur Yatani told the Daily Nation and Business Daily newspapers that the bond was no longer feasible, blaming the conflict in Ukraine for pushing up interest rates and causing yields on Kenya’s previous Eurobond to double to 12%.

Yatani did not respond to a request for comment, but his decision to abandon the bond echoes a finance ministry document seen by Reuters in April.

In May, Yatani told Reuters the plans for the Eurobond issue were still on.

Kenya’s last foray into the market was a year ago, when it sold a $1 billion Eurobond that received orders just short of $6 billion.

“Last year we borrowed at six per cent and now it stands over 12 per cent. This is no longer feasible. That’s why we’re still exploring options to look at a number of banks that can advance us the money at a cheaper rate,” Yatani told the Daily Nation.

A JPMorgan index of Kenya’s Eurobonds has plummetted 21% in the past six months, compared to a 14.8% drop for African bonds and a fall of almost a third for Ghana.

At a JPMorgan conference on May 25, Kenyan authorities said they were looking at “financing from multilateral and bilateral partners while syndicated loans may also be an option in the near-term,” said JPMorgan frontier markets strategist Ayomide Mejabi.

He said Kenya is expected to try to issue a Eurobond later this year if the market improves, as the country’s current account deficit was widening.

“This likely will be around $1.0 billion rather than $1.2 billion, which we expected previously,” Mejabi told Reuters in emailed comments.

At 0910 GMT on Friday, Kenya’s 2032 Eurobond was trading with a yield of 12.251%, according to Tradeweb data, up 26 basis points from the previous close. The yield on its 2028 bond was 12.662%, up 33 basis points.

Eurobond investors cited a pledge by presidential candidate Raila Odinga earlier this week to restructure Kenya’s debt as an additional factor putting the bonds under pressure, on top of inflation and rising U.S. interest rates.

However, they said they weren’t immediately concerned about its ability to repay its debts.

“Kenya’s debt affordability pressures are not yet as acute as some other high yielding names,” Scott Fleming, an asset manager at Fideuram, told Reuters by email.

“We need to get through the election, we need to get the winner to reassure markets, then things can start to normalize again,” Abrdn emerging market debt investment director Kevin Daly said.

Source: REUTERS

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