Posted on November, 14, 2024 at 05:17 pm
The Pan-African Payments and Settlement System (PAPSS) can save the continent as much as $5 billion in processing costs by eliminating the dollar in cross-border African transactions, says the head of business and commercial banking at Standard Bank, the continent’s biggest bank.
Speaking to Bloomberg, Tunde Macaulay of Standard Bank Group, said that clearing transactions through U.S. or European banks imposes delays and costs on African businesses.
PAPSS, a unified payment system under the African Continental Free Trade Area (AfCFTA) pact can alleviate these challenges, said Macaulay, who has 25 years of experience working across the continent.
The system, which was introduced in 2022, could also integrate around $50 billion of informal trade into the formal economy, Macaulay noted.
“We will have visibility of it if the payment system is implemented the way it’s supposed to be,” he said.
“That’s the intention – to remove this friction across payments.”
According to a 2022 report from the Africa Export-Import Bank, over 80% of cross-border payments from African banks are still processed offshore, typically routed through Europe or the U.S. Given that only 16% of Africa’s trade is conducted within the continent, compared to over 60% in the European Union, this reliance on external clearing presents significant challenges and missed opportunities for intra-African trade.
Source: Bitcoin KE