African Export-Import Bank (Afreximbank) and AfCFTA Secretariat on Tuesday announced the operational roll-out of the Pan-African Payment and Settlement System (PAPSS).

The revolutionary Financial Market Infrastructure is to enable instant, cross-border payments in local currencies between African markets.

By simplifying cross-border transactions and reducing the dependency on hard currencies for these transactions, PAPSS is set to boost intra-African trade significantly and underpin the implementation of the African Continental Free Trade Area (AfCFTA).

A statement from the partners said PAPSS would serve as a continent-wide platform for the processing, clearing and settling of intra-African trade and commerce payments, leveraging a multilateral net settlement system.

Its full implementation is expected to save the continent more than US$5 billion in payment transaction costs each year.

The development of a pan-African payments infrastructure has been made possible by some of the continent's leading institutions.

The platform has been developed by Afreximbank, who also acts as the main Settlement Agent in partnership with participating African Central banks.

The implementation of the infrastructure is taking place in collaboration with the African Continental Free Trade Area (AfCFTA) Secretariat with the endorsement of the African Union (AU).

The statement said the commissioning of PAPSS followed a successful pilot phase in the countries of the West African Monetary Zone (WAMZ), with live transactions done in an instant.

The West Africa Monetary Institute (WAMI) collaborated with Afreximbank in launching the system in the WAMZ.

"This an important milestone for the continent and PAPSS is now engaged in advanced discussions with other national and regional institutions to rapidly expand continent-wide connectivity," the statement said.

Afreximbank provides settlement guarantees on the payment system and overdraft facilities to all settlement agents.

To accelerate expansion and ensure settlement finality, Afreximbank has approved US$500 million to support the clearing and settlement in West African Monetary Zone (WAMZ) countries. It is estimated that a further US$3 billion will be made available to support the systems continent-wide implementation.

Professor Benedict Oramah, President of Afreximbank and Chairman person of PAPSS Management Board, said:

"With the implementation of PAPSS, Africa can expect to begin to reap the fruits of the African Continental Free Trade Agreement. Afreximbank is proud to have contributed in the realization of the multi-decade dream that seemed unachievable just a few years ago"

"PAPSS is not positioned to replace existing regional and national payment systems but to collaborate and work with them in better integrating African economies for the benefit of all. We thank the African Union, the AfCFTA Secretariat, the West African Monetary Institute and African Central banks for a remarkable outcome."

H.E Wamkele Mene, Secretary-General of the African Continental Free Trade Area, said:

"The implementation of the Agreement establishing the AfCFTA will improve intra-Africa trade, necessitating in this regard, the establishment of a payment system to facilitate affordable and efficient cross border trade transactions. It is on this basis that the AfCFTA Secretariat strongly supports the development of a Pan African Payment and Settlement System (PAPSS) that will usher in a new phase in the African economic trajectory."

"The introduction of PAPSS provides Africa with greater capacity to conduct cross-border transactions and expand the scale of both active and latent opportunities for enhanced intra-African trade."

Godwin Emefiele, Governor Nigerian Central Bank, said:

"PAPSS has been brought about by our collective desire to facilitate and accelerate the growth of intra-African trade. With central banks working actively together alongside the Afreximbank, we are ushering in a new phase in Africa's economic trajectory, in keeping with the ideals of the African Continental Free Trade Area.

"The introduction of PAPSS provides central banks with greater transparency and control as we now have a single window into all cross-border transactions emanating from our various jurisdictions and across the continent."

Mike Ogbalu III, CEO of PAPSS said: "PAPSS is designed to be a fundamental rail connecting African markets to each other and enabling individuals, businesses and governments on the continent to trade with each other seamlessly. PAPSS will provide fresh impetus for businesses to scale more easily across Africa, essentially eliminating the borders that have balkanized us and robbed us of our economic prosperity for so long."

"PAPSS has demonstrate credibility through its successful pilot and proof of concept in the WAMZ region, a region with the diversity and complexity anticipated in the larger African context (multi-lingual, multi-currency, multi-regulator, etc). "Following the accomplishment of this milestone, PAPSS will now set its sights on integrating the rest of the continent into this critical infrastructure by integrating National Payment Systems, Regional Payment Systems and other financial services providers.

PAPSS was launched on July 7th, 2019 in Niamey, Niger, at the 12th Extraordinary Summit of the Assembly of the African Union (AU) who adopted it as a key instrument for the implementation of the African Continental Free Trade Agreement (AfCFTA).