Regional Banks to integrate with PAPSS
The Ecobank Group and Standard Bank Group, with operations in Zimbabwe, are part of the five African multinational commercial banking groups that have signed Memorandums of Understanding (MOUs) with the Pan-African Payment and Settlement System (PAPSS).
PAPSS, which works in collaboration with Africa’s central banks, 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 regions.
Access Bank Group, KCB Group and UBA Group also signed the MuU with the aim to revolutionise the settlement of cross-border transactions across Africa, leveraging on the vast network of subsidiaries and representative offices across major economic centres across Africa.
According to a statememt released by PAPSS, signature of these Memorandums signifies a monumental step forward in the pursuit of seamless cross-border trade payments throughout the almost 40 countries covered by these Banks.
“The broad collaboration between PAPSS and African commercial banks , will pave the way for enhanced efficiency, transparency, and reliability in intra-African settlement,” reads part of the press release.
As part of this partnership, the regional banks will collaborate closely with PAPSS to ensure seamless integration of PAPSS into their existing systems.
Commenting on the signing, Professor Benedict Oramah, President of Afreximbank, said: “the signature of these MoUs marks a remarkable step towards the realisation of the aspirations of Africa’s foreleaders, who envisioned the creation of a payment and clearing union about six decades ago.
“It also draws us closer to domesticating cross-border payments by enabling payments for cross-border trade in African currencies while strengthening African currencies. By leveraging on the vast continental coverage of these African commercial banks, PAPSS will seamlessly facilitate cross-border trade and payments and boost intra-African trade and investments”.
Also commenting on the signing, Wamkele Mene, Secretary General of the AfCFTA, said: “the introduction of the new PAPSS Model for onboarding African Commercial Banks and the signing of the MoUs with the five African Commercial Bank Groups signifies a bold step towards the full operationalisation of PAPSS for the benefit of African traders and SMEs in the implementation of the AfCFTA Agreement.”
The Chief Executive Officer of PAPSS, Mike Ogbalu III, expressed enthusiasm about these collaborations, stating that “these partnerships with Access Bank Group, Ecobank Group, KCB Group, Standard Bank Group, and UBA Group mark a significant milestone in the journey toward a more integrated and efficient African banking landscape.
By embracing PAPSS’ Commercial Bank Settlement Model, these banks are helping build a robust continental platform for fostering cross-border payments, thereby paving the way for financial inclusion and substantial continental economic development.”
These MOUs were signed on Monday, 19 June 2023, at the opening ceremony of Afreximbank’s 30th Anniversary Celebrations and 30th Annual Meetings held in Accra, Ghana, in the presence of Heads of State and Prime Ministers from Africa and the Caribbean, Heads of continental policy and governance institutions as well as international institutions.
The MOUs will be put into effect gradually in partnership with central banks in the countries where the five Group Banks operate.
Reserve Bank governor Dr John Mangudya is in full support of PAPSS.
In an interview, on the sidelines of the AAM2023, Dr Mangudya said: “As Africans we need to use our own currencies to trade amongst ourselves and only use foreign currency for the net settlements, otherwise for anything over and above what the trades our African currencies were not able to pay.
” In that way it’s very important for promoting trades, as you know trade is about exchange of goods and services.
” In the exchange what is important is settlement, so we now have a system for doing that. It means that you need to develop a system that is compliant, ” he said.
Dr Mangudya said Zimbabwe has already signed to be using that system developed by Afreximbank were the country is the third largest Class A shareholder.-ebusinessweekly
