PAPSS Has Built the Network. Now Comes the Test of Getting Africa to Use It

The Pan-African Payment and Settlement System is moving into a more difficult phase of its development: converting an expanding continental payments network into routine infrastructure for African businesses and consumers.

Afreximbank-backed PAPSS is targeting faster adoption and transaction growth as it expands its network across the continent. The system was created to enable cross-border payments in African currencies, reducing the need for transactions between African countries to be routed through correspondent banks and third-country currencies.

That ambition is closely tied to the practical implementation of the African Continental Free Trade Area. Removing tariffs and other trade barriers can increase opportunities for intra-African commerce, but businesses still need payment infrastructure capable of settling transactions efficiently across national borders.

From infrastructure to usage

PAPSS has spent its early years connecting central banks, commercial banks and other financial institutions. The next measure of success will increasingly be usage: how many businesses can access the system, how easily payments move between markets and whether transaction volumes become significant enough to change the economics of intra-African commerce.

Cross-border African transactions have historically often required conversion into currencies such as the US dollar or euro before being converted into the recipient’s currency. That process can introduce additional foreign-exchange costs, settlement complexity and dependence on banking infrastructure outside the continent.

PAPSS is designed to allow an originating party to pay in its local currency while the beneficiary receives funds in its own local currency, with settlement handled through the continental system.

Why adoption matters for AfCFTA

The infrastructure could be particularly relevant to smaller companies. Large corporations can often absorb the administrative and financial costs associated with cross-border settlement more easily than small and medium-sized businesses. For SMEs, payment costs and delays can become another barrier to trading beyond their domestic markets.

That makes payment interoperability an important, if less visible, part of Africa’s trade-integration agenda. AfCFTA can create a larger formal market, but the commercial benefits depend on businesses being able to move goods, services and money across that market efficiently.

The challenge for PAPSS is therefore changing. Building connections between institutions establishes the rails. Persuading banks, fintech companies, merchants and businesses to use those rails at meaningful scale determines whether the infrastructure changes how African trade actually works.

Source: Afreximbank and the Pan-African Payment and Settlement System.