The Pan-African Payments Settlement System: An Advancement of Africa in the Sphere of International Trade and Commerce?


On the 13th of January 2022, the Pan-African Payments and Settlement System (PAPSS) was officially launched in Accra, Ghana, with key player countries of the African economy fully represented and actively involved.[1] This came after the system had been made available for operation on the 28th of September, 2021, following a successful pilot phase in the countries of the West African Monetary Zone (WAMZ), viz: Nigeria, Gambia, Ghana, Liberia, Guinea and Sierra Leone.[2]

The rationale behind the development of this system, was and remains to enable and facilitate a revolution in the existing financial structures, for cross-border economic transactions involving local currencies[3]. It is focused on the goal of boosting existing African markets, while also encouraging the development of new ones, thus, fostering economic and socio-cultural harmony.

This article delves into a cursory analysis of the Pan-African Payments and Settlement System (PAPSS), in a bid to espouse its relevance, benefits, operational dynamics, challenges and possible limitations, and the likely future of the African economy post-PAPSS.


There are no doubts that the PAPSS was birthed to tackle and curb or reduce to the barest minimum, the historic challenges of making payments across African borders, especially in the course of trade and economic transactions. This objective is to be achieved while adding value to the African economy on international trade ranking, through established African market structures for all stakeholders, ranging from governments to banks and payment providers, then to corporate and small enterprises and finally to individuals.[4]

The PAPSS was rolled out as a project spearheaded by the African Export-Import Bank (hereinafter referred to as ‘Afreximbank’), in collaboration with the African Continental Free Trade Area (hereinafter referred to as ‘ACFTA’). The Afreximbank was established on 8th May, 1993, in Abidjan under the auspices of the African Development Bank[5]. While the ACFTA was established by virtue of the Agreement Establishing the African Continental Free Trade Area, which was adopted on March 21st, 2018, and came into force on May 30th, 2019[6].

Through the development of the PAPSS, Afreximbank and the ACFTA jointly established their primary purpose of improving intra-African trade, boosting the trading position of Africa and African countries in the international market, while also giving Africa a unified voice, for and in International trade policy development and global trade negotiations.


Being a system designed to be all-inclusive, the PAPSS duly accommodates all relevant stakeholders in the intra-African trade and commerce setting including private individuals. It functions as an immediate or almost immediate fund transfer facilitator processing instantly, payments from a beneficiary of the system, in one African country to another in a different African country.

The operational flow of the PAPSS is herein shown below:[7]

  • A sender issues a payment instruction in their local currency to their bank or payment service provider;
  • Payment instruction is sent to the PAPSS system;
  • PAPSS carries out all necessary validation checks on the payment instruction;
  • The payment instruction is then forwarded to the receiver’s bank or payment service provider;
  • The receiver’s bank clears the funds to the beneficiary in their local currency.

From the above, it is interesting to observe that, apart from the fact that the above process is designed to work in a rather seamless and feasible manner, the PAPSS is a link between the several existing financial service providers and banks, resident in different African countries. This fosters an undeniably easy economic and financial alliance, among the several concerned financial entities and African countries. This is especially like the interaction occasioned by the PAPSS between the several distinctly established financial institutions, that foster the development of mutually beneficial and healthy financial/trade policies, geared at improving intra-African trade. This in turn also positively impacts the domestic financial/economic atmosphere of the respective participating African countries.

It is important to note that at the top of the operational structure of the PAPSS, are the Central Banks of the several participant countries, acting as the National Settlement Agents of the respective countries.[8] There exists a governing council of the PAPSS, comprising the Central Bank Governors of the six (6) pilot Countries of the PAPSS namely: Nigeria, Gambia, Ghana, Liberia, Guinea and Sierra Leone with the Governor of the Central Bank of Nigeria, Godwin Emefiele, heading the council.[9]


Prior to the development of the PAPSS, there existed several circumstances which grossly hampered and still hamper the development of intra-African trade making same very monotonous, unattractive and unprogressive. These circumstances include but are not limited to:

  1. The heavy reliance on third-party currencies, such as the U.S Dollars and British Pounds, for intra-African trade and financial transactions which resulted in the gross relegation of local currencies to the background. In effect, this created an atmosphere wherein stakeholders regarded the several local currencies, as inferior and unreliable for cross-border trade.
  2. The recurrent political instability and insecurity, especially as occasioned by the series of unchecked coups d’état, overwhelming corruption of political officers and the unjustified non-responsiveness of Governments to the economic plights of their respective countries, continue to clog intra-African trade activities. Till date, these circumstances have drastic effect on the value of the various local currencies and the impact of financial policies.
  3. The technological backwardness of several African countries and the snail-like attitude in embracing up-to-date technological advancements, leave several African countries, unable to catch up with modern trade facilitation technology and systems.
  4. The heavy reliance on human labour rather than the employment of automated/digital systems, coupled with the several existing financial checkpoints, occasioned by the need to convert local currencies to a more accepted third-party currency, and then the difference in financial systems in the various distinct African countries.

Although the development of the PAPSS does not put an end to all the glitches, posed by the several existing unfavourable circumstances hampering, intra-African trade and commerce were followed up with utmost commitment and dedication by the several participating African countries.

The PAPSS poses several positive impacts and benefits in the development of intra-African cross-border trade and commerce, in the following ways:

  1. The establishment of a simplified process and platform, which eschews the overwhelming cost and difficulties associated with foreign exchange, during cross-border transactions between African countries.
  2. The fostering of healthy innovations in cross-border trade, owing to the ease of intra-African trade occasioned by the development of the PAPSS.
  3. The creation of a secure cross-border payment system, across Africa especially as the PAPSS was designed and developed with such technological sophistication, to help provide payment security to all parties involved, while also eschewing the need to transport foreign currencies, especially in the case of transactions involving individuals.
  4. New African markets get the opportunity to spring up and boom, as the PAPSS now creates an all-inclusive atmosphere. This also enables struggling African economies to develop and grow further.
  5. The PAPSS allows for increased transparency in cross-border trade transactions, involving relevant stakeholders as the various transaction are all properly assessed, monitored and duly accounted for.

It is noteworthy that the PAPSS does not bring to an end, the several problems associated with intra-African trade nor does it solve the several issues of instability occasioned by the existing currencies, considering the fact that these currencies continue to be affected by poor economic productivity, and the several incidences of political instability/insecurity, as evident in the unending cases of coups and corruption.

Nevertheless, the PAPSS is a great financial revolution for Africa, especially in the area of international trade. This initiative, with the right commitment and follow-up from participating African Countries, will shoot intra-African trade to the next level, while boosting and benefiting businesses of African origin. The PAPSS will minimize the high transactional costs associated with intra-African trade.

For a country like Nigeria with the largest market in Africa, this is a major boost in promoting and exercising its financial and economic capabilities. This initiative creates an opportunity to improve and increase its returns from intra-African trade, especially from the export and regional sales of locally made commodities and services. For Nigerian Commercial Banks, just as is the case in other participant countries of the PAPSS, the PAPSS is a blessing. This is because the new system helps reduce the liquidity requirements for commercial banks, which are usually associated with non-domestic transactions.


In summary, the Pan-African Payments and Settlement System (PAPSS) is a beautiful invention and a game-changer that sets Africa, as a continent, on a higher pedestal in international trade. Although it may not solve all the problems associated with cross-border trade in Africa, it brings closer to reality, the dream of having a unified, organized and fully integrated market in Africa.

African leaders must be ready to commit to achieving this course, set by the development of the PAPSS, not just by being mere signatories and participants of the PAPSS, but by ensuring the establishment of key economic and political strategies, geared at facilitating a seamless or near seamless cross-border African trade.

  1. Ubah Jeremiah IfeanyiPAPSS officially launched to aid payment transaction across Africa’ at < PAPSS-officially-launched-to-aid-payment-transaction-across-Africa/%3famp=1> accessed on 27/1/2022 at 3:00pm
  2. Emeka Ejere Afrexim Bank’s PAPSS to save Africa $5bn annually’ at <$5bn-annually/> accessed on 27/1/2022 at 4:00pm
  3. Hope Moses-Ashike ‘Explainer: What to know about Pan-Africa Payment System’ at <> accessed on 27/1/2022 at 3:39pm
  4. See ‘Benefits of PAPSS’ at <> accessed on 26/1/2022 at 4:30pm
  5. African Export-Import Bank at

    <,History,laws%20of%20the%20participating%20states.> accessed on 26/1/2022 at 6:30pm

  6. ‘Agreement Establishing the African Continental Free Trade Areaat <www.> accessed on 27/1/2022 at 4:56pm
  7. ‘How PAPSS works’ at <> accessed on 26/1/2022 at 4:30pm
  8. Alexander Onukwue ‘A New payment platform for African currencies is a push for independence from the dollar’ at <www.> accessed on 27/1/2022 at 4:00pm
  9. Ibid

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