The Pan African Payment and Settlement System (PAPSS) and the African Securities Exchange Association (ASEA) have signed a Memorandum of Understanding (MoU) to enhance collaboration and cooperation in promoting cross-border payments infrastructure in Africa.
The MoU was signed during the ASEA 2023 Building African Financial Markets Seminar held in Victoria Falls, Zimbabwe, which brought together stakeholders from across Africa to discuss ways to deepen integration and connectivity of African capital markets.
For a long time, investors doing business in Africa have struggled with making and settling cross-border payments. Payments take a long time to complete, are expensive since the existing environment necessitates the use of correspondent banks outside of the continent, and are done in foreign currencies (USD or Euro).
Hence, African Export and Import Bank (Afreximbank) and the African Continental Free Trade Area (AfCFTA) Secretariat developed PAPSS, which enables instant cross-border payment in local currency.
Through the umbrella of ASEA, with nine exchanges and a combined market capitalization of $1.5 trillion, PAPSS provides an opportunity as the payment system to further enhance the African Exchanges Linkage Project (AELP), a flagship project of ASEA to facilitate cross-border trading of securities in Africa.
PAPSS has started a period of fast deployment of its system throughout all African nations, having already gone live in the countries comprising the West African Monetary Zone (WAMZ), namely Nigeria, Ghana, Liberia, Gambia, and Guinea. As a result, Zimbabwe, Zambia, and Djibouti have recently joined the network and will soon be operational. This partnership with ASEA will also facilitate the deployment of PAPSS across the ASEA member nations.
Commenting on the signing, the Chief Executive Officer of PAPSS, Mike Ogbalu III, said: “PAPSS supports a wide variety of use cases, including cross-border retail and trade transactions for individuals and corporations and cross-border investments with the African Stock Exchanges. Consequently, working with ASEA, which pioneered the AELP with cross-border securities trading as a central tenet, is a significant step towards the rollout of PAPSS throughout the continent”.
