Latest news with #PAPSS
Mail & Guardian
23-07-2025
- Business
- Mail & Guardian
Can Africa trade without the dollar?
The Pan-African Payment and Settlement System seeks to liberate the continent from the dollar without waiting for a common currency – but there are hurdles to overcome. File photo As South Africa and its continental neighbours grapple with currency instability, downgraded credit ratings and fragile economies, a quiet financial revolution is taking shape, one that could determine the future of intra-African trade and the continent's financial autonomy. At the heart of this is the Pan-African Payment and Settlement System (PAPSS), a homegrown technical platform launched to allow African countries to trade in their own currencies without relying on the US dollar or the euro. But is Africa ready to trade with itself? PAPSS vs The dollar trap The PAPSS, developed by the African Export-Import Bank (Afreximbank) in partnership with the African Continental Free Trade Area (AfCFTA) Secretariat, promises to slash transaction costs and enable instant cross-border payments. The idea is politically attractive: let a South African importer pay in rands while a Kenyan exporter receives shillings all in real time, with no need to route funds through New York or Frankfurt. In theory, this could unlock vast economic potential. Africa currently settles more than 80% of its cross-border payments through external correspondent banks, often in the US or Europe. This reliance not only incurs high costs and delays but also exposes African trade to global shocks, compliance bottlenecks and foreign exchange constraints. The PAPSS aims to change that by enabling direct currency-to-currency transactions within the continent. Yet the challenges facing the PAPSS and its backers are formidable. Afreximbank, the system's main financier and strategic driver, is under pressure. A string of African sovereign downgrades by international credit agencies has heightened scrutiny of Afreximbank's loan book and its exposure to high-risk borrowers. Ghana, Kenya, Nigeria and Ethiopia have faced rating downgrades in the past two years, raising concerns about the quality of collateral and repayment capacity. This creates a credibility problem: can a regional institution with increasingly fragile clients underpin a pan-African payment infrastructure? Afreximbank's growing liabilities, if not offset by capital injections or improved repayment profiles, could stall the rollout of the PAPSS and erode confidence among participating states. A digital detour around a single currency Africa has long toyed with the dream of a single currency. The Abuja Treaty of 1991 set out a roadmap toward an African Monetary Union. But political differences, economic disparities, and the complexity of ceding monetary sovereignty have stalled the project for decades. Instead of a single currency, the PAPSS champions interoperability: the capacity for different financial systems, currencies and platforms to communicate and transact with each other seamlessly. In essence, it's a digital workaround. Rather than replace the rand, naira or cedi, the PAPSS enables these currencies to speak to each other in real time. This approach is technologically feasible, politically palatable and potentially transformative. But it demands more than just software. Interoperability requires legal harmonisation, institutional cooperation and robust digital infrastructure. For example, payment messages must conform to common standards such as ISO 20022; anti-money laundering procedures must be synchronised; and all actors must trust the system's settlement finality. As of mid-2025, the PAPSS is live in parts of West Africa and has integrated with 13 central banks and 28 commercial banks. It has signed partnerships with MFS Africa, one of the continent's largest digital payment networks, and the Arab Monetary Fund's BUNA system, extending its interoperability to the Middle East. Yet the system remains in pilot mode in many regions. South Africa, despite having one of the most advanced national payment systems on the continent, has not joined the PAPSS. The South African Reserve Bank has taken a cautious stance, citing the need for security, legal clarity, and risk mitigation. The credibility gap: Afreximbank under strain The credibility of Afreximbank is central to the PAPSS's success. The bank has earned praise for its role in facilitating trade finance and responding to crises, such as its $3 billion Covid-19 response facility. But its balance sheet is under strain. With several borrower countries facing liquidity crunches and International Monetary Fund bailouts, Afreximbank's ability to support the PAPSS in a sustained, scalable manner is uncertain. Global investors have taken note. Yields on Afreximbank bonds have risen, reflecting perceived risk. Meanwhile, Western partners have raised questions about the bank's exposure to politically unstable regimes and non-performing loans. These dynamics complicate Afreximbank's role as the financial bedrock of the PAPSS. This matters because credibility is currency in financial markets. Central banks, commercial banks, and fintech firms will only integrate into the PAPSS if they believe it is backed by a solvent, transparent, and technically robust institution. Any hint of fiscal fragility could deter adoption and send participants back to the familiarity of the dollar. Currency instability Currency volatility is perhaps the greatest threat to the PAPSS. In 2024 alone, the Ghanaian cedi fell 25% against the dollar, while the Nigerian naira lost more than 35% of its value. Inflation, budget deficits, and political instability continue to plague many African economies. This instability has real consequences. When currencies are volatile, businesses are reluctant to price goods in local money. Exporters demand hard currency, and importers hedge their bets. The PAPSS, by enabling local-currency settlement, assumes that market participants have confidence in the relative value of domestic currencies. But this is often not the case. Moreover, the legacy of hyperinflation, capital controls, and bank insolvencies in parts of Africa has left a deep scar. Trust in digital financial infrastructure cannot be separated from trust in national macroeconomic policy. If businesses doubt that today's kwacha will hold value tomorrow, they will bypass PAPSS regardless of its technical appeal. An ambivalent South Africa South Africa's ambivalence toward the PAPSS reflects a broader tension. On one hand, the country is committed to regional integration and expanding intra-African trade. On the other, its sophisticated financial ecosystem, anchored by the National Payment System, is wary of being linked to less stable regimes. The reserve bank has long promoted interoperability within its own borders and maintains strong oversight of domestic payment providers. But integrating with the PAPSS means embracing a shared digital infrastructure, with all the attendant risks: inconsistent regulatory enforcement, lower cybersecurity standards, and potential exposure to volatile currencies. Nevertheless, South Africa's participation could be a game-changer. As the continent's second-largest economy and a financial hub, its endorsement would lend credibility and accelerate adoption. The key may lie in phased integration, beginning with controlled corridors and bilateral settlements. The SME factor: Who benefits? One of the PAPSS's strongest arguments is its potential to empower small and medium-sized enterprises (SMEs). These businesses, which form the backbone of African economies, are often priced out of cross-border trade because of high banking fees, currency conversion costs and regulatory red tape. By simplifying payments, reducing costs, and enabling local currency use, the PAPSS could democratise trade. SMEs in Lesotho could source raw materials from Uganda without involving US-based banks. But this will only happen if the PAPSS becomes truly accessible. User interfaces, compliance processes and dispute resolution mechanisms must be tailored to small businesses, not just large corporates. The road ahead The PAPSS offers a tantalising glimpse of what an integrated African economy could look like: fast, frictionless and financially sovereign. But realising that vision requires more than technology. First, digital infrastructure must improve. Many African countries lack the bandwidth, cybersecurity protocols, and cloud services to support real-time payments at scale. Second, regulatory harmonisation must be accelerated. Disparate licensing regimes and data protection laws can obstruct cross-border fintech cooperation. Third, the issue of political will remains. The success of the PAPSS depends on the willingness of African governments and central banks to invest in a shared future. This includes difficult reforms: liberalising capital markets, building credible institutions, and curbing fiscal indiscipline. Finally, trust must be earned. The PAPSS must deliver consistent results, enforce its rules impartially, and protect users from fraud and abuse. Only then will businesses switch from legacy systems to a truly African financial network. The PAPSS seeks to liberate the continent from the dollar without waiting for a common currency. It bets on digital innovation as a substitute for monetary union. And it entrusts regional institutions like Afreximbank with a task usually reserved for global giants. Whether it succeeds will depend on how well Africa manages its contradictions: political instability vs. integration, sovereignty versus cooperation, ambition versus capacity. For now, the PAPSS remains a work in progress but one well worth watching. Rafia Akram is a lecturer in mercantile law.
Finextra
07-07-2025
- Business
- Finextra
Pan-African Payment and Settlement System and Interstellar unveil African currency marketplace
Building on the successful rollout of its groundbreaking continental payment infrastructure, the Pan-African Payment and Settlement System (PAPSS), in strategic collaboration with Interstellar, a leading African deep-tech company, have announced the launch of the PAPSS African Currency Marketplace (PACM). 0 This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author. The launch was announced on the sidelines of the 2025 Afreximbank ( Annual Meeting (AAM2025) held in Abuja from June 25 - 28. This next-generation Financial Market Infrastructure (FMI) represents a bold evolution of the PAPSS mission, addressing Africa's longstanding challenge of currency inconvertibility and enabling seamless, sovereign currency exchange for intra-African trade. For decades, Africa's economic momentum has been hindered by a fragmented financial landscape. The continent's 41 currencies, diverse regulatory environments, and lack of convertibility have created significant friction. To trade with neighbouring countries, African businesses have often relied on external (hard) foreign currencies for foreign exchange, creating what experts call the "hard and costly currency bottleneck." This workaround drains an estimated $5 billion annually in fees, delays, and opportunity costs, undermining the competitiveness of African enterprises and slowing progress toward realising the African Continental Free Trade Area (AfCFTA). 'PAPSS African Currency Marketplace is fully transparent, order book-driven, and operates with trusted counterparties, strictly adhering to local regulatory frameworks and global best practices,' affirmed Mike Ogbalu III, CEO of PAPSS. 'By creating a single, continent-wide liquidity pool, PACM serves as a powerful liquidity engine for intra-African commerce.' This launch marks a major strategic evolution in the PAPSS journey. According to Mr Ogbalu, since its official launch in 2022, PAPSS has enabled real-time cross-border payments across 17 countries, connecting 14 national switches and over 150 commercial banks. Initially piloted in the West African Monetary Zone (WAMZ), PAPSS rapidly expanded to become the core settlement layer of the AfCFTA's financial infrastructure. But while payment rails were laid, a deeper issue remained. 'We soon realised that solving for payments alone was not enough,' explained Mike Ogbalu. 'Corporations, airlines, reinsurance firms, and multinationals operating across Africa still faced a persistent hurdle: trapped capital, arising from limited currency convertibility and overreliance on hard currencies.' For example, he explained, over $2 billion is currently 'trapped' in African countries where airlines operate, unable to repatriate their funds due to exchange restrictions or depreciation of local currencies. 'The PAPSS African Currency Marketplace is the answer to that problem -- an extension of our commitment to building sovereign, frictionless financial infrastructure for Africa.' He added. The PAPSS African Currency Marketplace jointly developed by PAPSS and Interstellar, enables the direct exchange of African currencies without passing through hard currencies. As a transparent, continent-wide, peer-to-peer platform, it allows businesses to trade directly in local currencies in near real-time while remaining compliant with national regulations. It unlocks liquidity, releases trapped capital, eliminates excessive foreign exchange costs, and supports the continent's long-term goal of financial sovereignty. In partnership with PAPSS, the PAPSS African Currency Marketplace is built on Interstellar's enterprise-grade, blockchain-agnostic infrastructure, which enables the use of permissioned blockchain technology while ensuring institutional grade-security, scalability, and near instant settlement. 'This is not just about technology, it is about fulfilling a continental vision,' said Ernest Mbenkum, Founder and CEO of Interstellar during a fireside chat at the launch. 'PAPSS African Currency Marketplace was built from the ground up to serve Africa's specific needs. PAPSS and Interstellar are not just collaborators, we are co-architects of a new financial future, aligned in purpose and committed to transformation.' Ernest Mbenkum further emphasised, 'African currencies deserve a better place in the world. With this marketplace, your local currency is no longer just a medium of exchange, it becomes a vehicle of opportunity.' He also highlighted that this is only the beginning of Interstellar's vision, stating, 'We're building a future where Africa no longer needs to wait for foreign rails to move value. Our infrastructure will power Africa's financial renaissance.' Haytham El Maayergi, Executive Vice President of Afreximbank, noted: 'The PAPSS African Currency Marketplace gives us the power to transform trade dramatically, bringing us to trade with each other with a major benefit that we can now accept each other's currency.' The impact is already being felt. During its pilot phase, more than 80 African corporates transacted across 12 currency pairs, with all transactions settled in local currencies. For example, a company like Kenya Airways, which earns Nigerian Naira from ticket sales, can now use PACM to directly exchange Naira for Kenyan Shillings—without converting through a third currency. Early adopters include ZEP-RE (PTA Reinsurance Company) and Access View Africa, which called the platform 'a dream come true.' PAPSS African Currency Marketplace liberates trapped capital, eliminates excessive FX costs, and transforms multi-week settlement delays into near real-time execution. PAPSS CEO Mr. Ogbalu noted that following positive experiences of some early adopters, PAPSS had received interest from institutions outside Africa seeking to join the ecosystem. 'This demand proves the value of what we've built,' he said. With over 150 banks already connected through PAPSS and growing demand across the continent, PAPSS African Currency Marketplace stands as a game-changing financial tool for a more unified, sovereign, and efficient Africa. Concluding his opening keynote, Mr. Haytham El Maayergi, Executive Vice President - Global Trade Bank at Afreximbank reiterated: 'Africa will not rise by ideas. Africa will rise by actions. " The PAPSS African Currency Marketplace is now open to eligible corporations, financial institutions, and other market participants across the continent.
Zawya
07-07-2025
- Business
- Zawya
Pan-African Payment and Settlement System (PAPSS) and Interstellar unveil African Currency Marketplace eliminating $5 Billion trade bottleneck
Building on the successful rollout of its groundbreaking continental payment infrastructure, the Pan-African Payment and Settlement System (PAPSS), in strategic collaboration with Interstellar, a leading African deep-tech company, have announced the launch of the PAPSS African Currency Marketplace (PACM). The launch was announced on the sidelines of the 2025 Afreximbank ( Annual Meeting (AAM2025) held in Abuja from June 25 - 28. This next-generation Financial Market Infrastructure (FMI) represents a bold evolution of the PAPSS mission, addressing Africa's longstanding challenge of currency inconvertibility and enabling seamless, sovereign currency exchange for intra-African trade. For decades, Africa's economic momentum has been hindered by a fragmented financial landscape. The continent's 41 currencies, diverse regulatory environments, and lack of convertibility have created significant friction. To trade with neighbouring countries, African businesses have often relied on external (hard) foreign currencies for foreign exchange, creating what experts call the " hard and costly currency bottleneck." This workaround drains an estimated $5 billion annually in fees, delays, and opportunity costs, undermining the competitiveness of African enterprises and slowing progress toward realising the African Continental Free Trade Area (AfCFTA). 'PAPSS African Currency Marketplace is fully transparent, order book-driven, and operates with trusted counterparties, strictly adhering to local regulatory frameworks and global best practices,' affirmed Mike Ogbalu III, CEO of PAPSS. 'By creating a single, continent-wide liquidity pool, PACM serves as a powerful liquidity engine for intra-African commerce.' This launch marks a major strategic evolution in the PAPSS journey. According to Mr Ogbalu, since its official launch in 2022, PAPSS has enabled real-time cross-border payments across 17 countries, connecting 14 national switches and over 150 commercial banks. Initially piloted in the West African Monetary Zone (WAMZ), PAPSS rapidly expanded to become the core settlement layer of the AfCFTA's financial infrastructure. But while payment rails were laid, a deeper issue remained. 'We soon realised that solving for payments alone was not enough,' explained Mike Ogbalu. 'Corporations, airlines, reinsurance firms, and multinationals operating across Africa still faced a persistent hurdle: trapped capital, arising from limited currency convertibility and overreliance on hard currencies.' For example, he explained, over $2 billion is currently 'trapped' in African countries where airlines operate, unable to repatriate their funds due to exchange restrictions or depreciation of local currencies. 'The PAPSS African Currency Marketplace is the answer to that problem -- an extension of our commitment to building sovereign, frictionless financial infrastructure for Africa.' He added. The PAPSS African Currency Marketplace jointly developed by PAPSS and Interstellar, enables the direct exchange of African currencies without passing through hard currencies. As a transparent, continent-wide, peer-to-peer platform, it allows businesses to trade directly in local currencies in near real-time while remaining compliant with national regulations. It unlocks liquidity, releases trapped capital, eliminates excessive foreign exchange costs, and supports the continent's long-term goal of financial sovereignty. In partnership with PAPSS, the PAPSS African Currency Marketplace is built on Interstellar's enterprise-grade, blockchain-agnostic infrastructure, which enables the use of permissioned blockchain technology while ensuring institutional grade-security, scalability, and near instant settlement. 'This is not just about technology, it is about fulfilling a continental vision,' said Ernest Mbenkum, Founder and CEO of Interstellar during a fireside chat at the launch. 'PAPSS African Currency Marketplace was built from the ground up to serve Africa's specific needs. PAPSS and Interstellar are not just collaborators, we are co-architects of a new financial future, aligned in purpose and committed to transformation.' Ernest Mbenkum further emphasised, ' African currencies deserve a better place in the world. With this marketplace, your local currency is no longer just a medium of exchange, it becomes a vehicle of opportunity.' He also highlighted that this is only the beginning of Interstellar's vision, stating, 'We're building a future where Africa no longer needs to wait for foreign rails to move value. Our infrastructure will power Africa's financial renaissance. ' Haytham El Maayergi, Executive Vice President of Afreximbank, noted: ' The PAPSS African Currency Marketplace gives us the power to transform trade dramatically, bringing us to trade with each other with a major benefit that we can now accept each other's currency.' The impact is already being felt. During its pilot phase, more than 80 African corporates transacted across 12 currency pairs, with all transactions settled in local currencies. For example, a company like Kenya Airways, which earns Nigerian Naira from ticket sales, can now use PACM to directly exchange Naira for Kenyan Shillings—without converting through a third currency. Early adopters include ZEP-RE (PTA Reinsurance Company) and Access View Africa, which called the platform ' a dream come true.' PAPSS African Currency Marketplace liberates trapped capital, eliminates excessive FX costs, and transforms multi-week settlement delays into near real-time execution. PAPSS CEO Mr. Ogbalu noted that following positive experiences of some early adopters, PAPSS had received interest from institutions outside Africa seeking to join the ecosystem. 'This demand proves the value of what we've built,' he said. With over 150 banks already connected through PAPSS and growing demand across the continent, PAPSS African Currency Marketplace stands as a game-changing financial tool for a more unified, sovereign, and efficient Africa. Concluding his opening keynote, Mr. Haytham El Maayergi, Executive Vice President - Global Trade Bank at Afreximbank reiterated: ' Africa will not rise by ideas. Africa will rise by actions. " The PAPSS African Currency Marketplace is now open to eligible corporations, financial institutions, and other market participants across the continent. Distributed by APO Group on behalf of Afreximbank. Media Contact: Papa Thiongane communications@ Website: marketplace@ About PAPSS: The Pan-African Payment and Settlement System – 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 collaborates with African central banks to offer payment and settlement solutions that commercial banks and licensed payment service providers (switches, fintechs, aggregators, etc.) across the continent can connect to, making these services accessible to the public. To date, PAPSS has developed and launched 3 payment solutions: PAPSS Instant Payment System (IPS), PAPSS African Currency Marketplace (PACM), and the PAPSSCARD. Afreximbank and the African Union ('AU') first announced PAPSS at the Twelfth 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 thirteenth (13th) extraordinary session, held on December 5, 2020, the assembly of the African Union directed Afreximbank and the AfCFTA secretariat to finalise, 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. PAPSS was officially launched in Accra, Ghana, on January 13, 2022, thus making it available for use by the public. About Interstellar: Interstellar Inc. is Africa's leading enterprise blockchain infrastructure company —enabling secure cross-border transactions, stablecoin integration, and next-generation financial solutions across the continent. Its core platform, STARGATE, is a critical blockchain-agnostic, enterprise-grade infrastructure that empowers major institutions to build and scale secure, high-performance financial applications, including tokenization platforms and payments solutions.
Finextra
07-07-2025
- Business
- Finextra
Morocco joins The Pan-African Payment and Settlement System
The Pan-African Payment and Settlement System (PAPSS) is pleased to announce the entry of the Kingdom of Morocco into its growing network, with Bank Al-Maghrib officially signing the PAPSS membership agreement. 0 As a result, Morocco becomes the 17th country to join the PAPSS network, further solidifying the continent's commitment to financial integration and intra-African trade under the banner of the African Continental Free Trade Area (AfCFTA). Developed by the African Export-Import Bank (Afreximbank) in partnership with the African Union and the AfCFTA Secretariat, PAPSS enables real-time, efficient, and cost-effective cross-border payments in local currencies. By welcoming Bank Al-Maghrib, PAPSS advances its mission of connecting African central banks and facilitating seamless cross-border trade, payment flows, and investment across the continent. Mike Ogbalu III, Chief Executive Officer of PAPSS, lauded this latest milestone, stating: "We are delighted to welcome Bank Al-Maghrib to the PAPSS family. Morocco's entry as our seventeenth central bank member demonstrates the growing momentum and trust in PAPSS as the solution for Africa's cross-border payment challenges. With more countries joining, we are taking significant strides towards a truly unified African market, driving down transaction costs and empowering businesses and individuals across the continent." With Morocco's addition, PAPSS now has seventeen countries among its membership, along with over 150 commercial banks and 14 switches, and continues to expand its reach and impact across Africa.
Zawya
07-07-2025
- Business
- Zawya
CORRECTION: Bank Al-Maghrib signs up to The Pan-African Payment and Settlement System (PAPSS), Establishing Morocco as its 17th Country of Presence
The Pan-African Payment and Settlement System (PAPSS) is pleased to announce the entry of the Kingdom of Morocco into its growing network, with Bank Al-Maghrib officially signing the PAPSS membership agreement. As a result, Morocco becomes the 17 th country of presence, further solidifying the continent's commitment to financial integration and intra-African trade under the banner of the African Continental Free Trade Area (AfCFTA). Developed by the African Export-Import Bank (Afreximbank) in partnership with the African Union and the AfCFTA Secretariat, PAPSS enables real-time, efficient, and cost-effective cross-border payments in local currencies. By welcoming Bank Al-Maghrib, PAPSS advances its mission of connecting African central banks and facilitating seamless cross-border trade, payment flows, and investment across the continent. Mike Ogbalu III, Chief Executive Officer of PAPSS, lauded this latest milestone, stating: "We are delighted to welcome Bank Al-Maghrib to the PAPSS family. Morocco's entry as our seventeenth country of presence demonstrates the growing momentum and trust in PAPSS as the solution for Africa's cross-border payment challenges. With more countries joining, we are taking significant strides towards a truly unified African market, driving down transaction costs and empowering businesses and individuals across the continent." With Morocco's addition, PAPSS is now present across seventeen countries, along with over 150 commercial banks and 14 switches, and continues to expand its reach and impact across Africa. Distributed by APO Group on behalf of Afreximbank. About PAPSS: The Pan-African Payment and Settlement System – 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 collaborates with African central banks to offer payment and settlement solutions that commercial banks and licensed payment service providers (switches, fintechs, aggregators, etc.) across the continent can connect to, making these services accessible to the public. To date, PAPSS has developed and launched 3 payment solutions: PAPSS Instant Payment System (IPS), PAPSS African Currency Marketplace (PACM), and the PAPSSCARD. Afreximbank and the African Union ('AU') first announced PAPSS at the Twelfth 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 thirteenth (13th) extraordinary session, held on December 5, 2020, the assembly of the African Union directed Afreximbank and the AfCFTA secretariat to finalise, 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. PAPSS was officially launched in Accra, Ghana, on January 13, 2022, thus making it available for use by the public.
