Africa Continental Free Trade Area (AfCFTA) said that the launch of the Pan-African Payments and Settlements System (PAPSS) would save the continent an estimated five billion dollars annually.
Mr Wamkele Mene, AfCFTA Secretary General, who revealed this at the 2nd edition of the AfCFTA secretariat quarterly press briefing on Friday, said this would be from the accruals from conversions to dollars.
He said that PAPSS, created in collaboration with the African Export-Import Bank (Afriexim bank), would address the currency conversion challenges for participating countries.
PAPSS is a centralised payment and settlement system created to serve the purpose of low cost and risk controlled payment clearing and settlement system under intra-African trade.
He said that six countries had been set up for the pilot scheme, some of which include; Nigeria, Ghana and Sierra Leone.
Mene projected that by the end of 2021, the secretariat would be in a position to reveal the platform availability for all countries to switch.
“There is an objective that one day, Africa would be a monetary union.
“Converting the about 42 currencies in Africa with its attendant cost of over five billion dollars yearly is a whole lot and so we want to reduce and eliminate this for the purpose of trading.
“Local banks would be able to switch to the platform as we are in consultation with the central banks and by the end of the year, we would be in a position to say the platform is available for all African countries that want to switch to it.
“Afriexim bank has invested over one billion dollars and it is a strong signal that the AfCFTA would work.
“If you run a Small and Medium Enterprise (SME) and you have to use a foreign platform for transaction, it is constraining and costly.
“With this system of payments, we would be able to enhance the effectiveness and competitiveness of SME as it addresses the constraints and costs associated with trade,” he said.
Mene also noted that the Rules of Origin mechanism of trade was at 86 per cent completion, even though the secretariat was gearing for 90 per cent completion before application.
Mene also stated that sensitisation and advocacy campaigns on the intricacies of the AfCFTA were a shared responsibility between participating states and the AfCFTA secretariat.
He revealed that an Africa business forum for the whole continent would be hosted later in the year to raise additional awareness.
This, Mene, said would also serve as a complementary step to what the various participating countries’ governments were already doing nationally on sensitisation.
“It is very important that the private sector is aware that there are export opportunities that this market creates and how they can maximally benefit from it.
“In all my visits to various participating countries, I have met with the private sector as a way to inform and incorporate them into what the AfCFTA is about,” he said