By Aduragbemi Omiyale
The Managing Director/Regional Director of Ecobank Nigeria, Mr. Patrick Akinwuntan, has predicted that intra-African trade could reach $300 billion by 2025.
He gave this prediction during an interview with Arise TV while speaking on the recently launched Pan African Payments and Settlement System (PAPSS).
He described the payment platform developed by Afreximbank as a good development, noting that it will serve as a backbone through which all countries in Africa can actualize transactions made in the free trade zone, adding that it will also create jobs, wealth, and deliver value to exporters on the continent.
“This common payment platform will enable Africa to grow intra-community trade from the current 16%, or $70 billion, to 50-55% over the next two to three years. This is huge because we could be talking about 300 billion dollars of intra-African trade, or almost 15% of Africa’s GDP.
“In addition, the PAPSS will also eliminate late payments, third-party currencies as well as households, small businesses and financial institutions. This is a positive development for intra-African trade. It is a step in the right direction. It will promote cross-border trade for African exporters, liberalize payments and provide payments that add value. Africa is here for real business. Africa is ready. Let’s go,” he said.
Further, Mr. Akinwuntan revealed that “Ecobank supports this initiative. Today, we can reach up to 35 countries because we already have a pan-African switch and we are already connected to PAPSS.
“I call for the collaboration of all stakeholders to achieve the desired goals; we have the key industry sectors that deal with pan-African trade.
“We have to go all the way with them, help them see the practical possibilities. We have a responsibility to send them this message that if they want to do a transaction through Africa, they do not need to look for an international bank. The PAPSS will operate in the same way as the NIBSS operates in Nigeria.
PAPSS is expected to boost intra-African trade by transforming and facilitating payment, clearing and settlement for cross-border trade across Africa.
Speaking at the launch, Prof. Benedict Oramah, President and Chairman of the Board of Afreximbank, said, “We look forward to building on AfCFTA’s creation of a single market across Africa. PAPSS provides the state-of-the-art financial market infrastructure linking African markets to each other, thus enabling instant cross-border payments in the respective local African currencies for cross-border trade.
“Afreximbank, as the primary settlement agent for PAPSS, provides payment system settlement guarantees and overdraft facilities to all settlement agents, in partnership with participating African central banks.
“The PAPSS will effectively eliminate Africa’s financial borders, formalize and integrate African payment systems and play a major role in facilitating and accelerating the huge AfCFTA-induced growth curve in intra-trade. African,” he said.
Also speaking at the event, PAPSS Managing Director, Mr. Mike Ogbalu stressed that the payment system was not designed to compete with or replace existing payment systems.
He said it would facilitate the level of connectivity that brings all payment systems together into one interoperable, efficient and affordable network.
“The PAPSS is designed for our currencies to recover in value to domesticate intra-African payments in this journey towards African prosperity. This is done while providing the highway that connects others to reach all parts of this continent as we seek to create the Africa we want,” he said.
The PAPSS pilot in the WAMZ central banks has been completed and the six central banks have tested and carried out the trial operations.
During the last week of August 2021, all central banks became active on the system and have since sent live transactions to the WAMZ region.
The PAPSS has been successfully piloted in all six countries of the West African Monetary Zone and promises to deliver multiple benefits and efficiencies to intra-African trade payments. As the main supporter of this initiative, Ecobank is already connected to PAPSS.