A new continent-wide payments system aimed at strengthening African fiat currencies and boosting intra-African trade recently went live. Discussions about the admission of other African countries are still ongoing.
SMEs are the main beneficiaries of the payment system
A new African payment system, the Pan-African Payment and Settlement System (PAPSS), recently went live in Ghana and is preparing the ground for its rollout across the continent. The payment system is intended to strengthen African fiat currencies and boost intra-African trade.
The payment system – the brainchild of the African Union, Afreximbank and AfCFTA — is an attempt to reduce the dependence of African countries on the US dollar. However, as Techcabal report notes that only seven countries – all members of the West African Monetary Area (WAMZ) – were part of the pilot phase.
Meanwhile, the same report suggests that the continent’s small to medium-sized enterprises (SMEs) could be the main beneficiaries of the PAPSS scheme. It adds that as more people use the PAPSS system, an estimated $5 billion in savings in settlement and transaction costs will be realized annually.
These savings, in turn, will allow SMBs to scale, as explained by Mike Ogbalu, the CEO of PAPSS.
“The launch marks a significant milestone in seamlessly connecting African markets. It will provide a new impetus for companies to more easily scale across Africa and is expected to save the continent more than US$5 billion in transaction costs each year,” noted Ogbalu.
Improved cross-border trade
Just like Ogbalu, who insists the new payments system could help the continent save billions of dollars, Pamela Coke-Hamilton, an executive director at the International Trade Centre, claims the new payments system will help the African continent break down trade barriers face SMEs . The manager explained:
ITC prepares companies to benefit from PAPSS by creating new opportunities for growth in cross-border e-commerce and sustainable trade.
The Techcabal report suggests that discussions about adding other African central banks are still ongoing. The report also notes that the new payment system has brought Africa closer to a single currency for the entire continent.
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Source: Crypto News Austria