NAIROBI- A new pan-African payments system created to facilitate trade on the continent is negotiating with more central and commercial banks to join the platform, its chief executive said on Tuesday.
The Pan-African Payments and Settlement System (PAPSS) launched in the six-nation West African Monetary Zone, including Nigeria, earlier this month, with six central banks and 15 commercial banks.
The system is a joint initiative of the continental free trade area, the African Union, Afreximbank and African central banks. Afreximbank has invested "massively" in the platform, its CEO Mike Ogbalu said, without giving a figure.
"Most commercial banks want to join fast," Ogbalu said. "There is also growing appetite from central banks as they see the need for PAPSS in intra-African trade, which eventually will stabilize their currencies."
He said the organisation was talking to other regional economic communities running payment systems, such as the six-nation East African Community, but declined to give details of specific banks with which negotiations are taking place.
The platform aims to boost trade in the Ghana-headquartered African Continental Free Trade Area, cutting transaction times across borders by allowing commercial banks to deal directly and saving the continent an estimated $5 billion in costs annually.
Currently, a trader's bank has to route a cross-border payment through a correspondent bank or two in the United States or Europe before it gets to the recipient's bank, which takes a minimum of three to five days, with charges at every point.
PAPSS bypasses that, with the sender's bank, the recipient's bank, and their respective central banks settling at one point.
"The savings will emanate from the elimination of the need (for traders) to solicit for a hard currency and the reduction in delays (and) charges."
More than 36 nations have joined the continental free trade area, which was launched in 2019 to bring together 55 nations into a single market with annual economic output of more than $2.5 trillion.
(Reporting by Duncan Miriri; Editing by Jan Harvey) ((email@example.com; Tel: +254 20 4991239; Reuters Messaging: firstname.lastname@example.org))