Kenya stands at the forefront of a pivotal moment as it anxiously awaits the outcome of its bid to host the regional headquarters for the groundbreaking Pan-African Payments and Settlement System (PAPSS) in Nairobi.
President Ruto's Vision
President William Ruto, known for his robust advocacy of Kenya's role in regional trade, has recently signaled the country's eagerness to become the host city for the PAPSS headquarters. This move aligns with Kenya's ambition to play a central role in fostering economic integration within the African continent.
Launched officially in January of the preceding year, the Pan-African Payments and Settlement System (PAPSS) promises to be a game-changer in the way companies across Africa conduct intra-African trade transactions. The system facilitates payments in local currencies, a monumental shift considering the continent boasts around 42 individual currencies.
Collaborative Endeavor: AfCFTA, Afreximbank, AU, and African Central Banks Unite
PAPSS is the result of a collaborative effort between the Africa Continental Free Trade Area (AfCFTA), the Africa Import-Export Bank (Afreximbank), the African Union (AU), and various African central banks. The collaboration aims to create a centralized payment and settlement system tailored for intra-African trade in goods and services.
Mike Ogbalu, CEO of PAPSS, reveals that the critical decision regarding the host country rests in the hands of the Association of African Central Banks (AACB). The AACB, composed of all the chiefs of central banks in Africa, will communicate its recommendations for the hosting country. Currently, the platform awaits this crucial decision.
President Ruto proudly announced Kenya's willingness to host the Pan African Payment Systems' headquarters, citing the nation's leadership in technology and its commitment to the continental free trade area.
Addressing the Dollar Dilemma
Kenyan businesses grapple with a dollar crisis, affecting their ability to make timely payments to overseas suppliers. President Ruto acknowledges the challenges and vows to address the dollar shortage, highlighting the significant role PAPSS could play in alleviating this crisis.
Afreximbank President Benedict Oramah predicts that PAPSS could potentially save African businesses a staggering $5 billion annually in transaction costs. The innovative system's primary advantage lies in negating the need for currency conversion into the US dollar, easing the pressure on local currencies.
Presently, traders in Kenya resort to third currencies like the US dollar, Euro, or British pound when transacting with counterparts in other African countries. PAPSS seeks to revolutionize this process by facilitating instant payments, eliminating the need for local traders to convert their currencies into hard currencies.
Trade Facilitation and Currency Streamlining: CBK Governor's Perspective
Kamau Thugge, the Governor of the Central Bank of Kenya (CBK), emphasizes the timeliness of PAPSS and its potential to alleviate the foreign exchange currency shortage. He envisions that the platform will empower Kenyan traders to tap into opportunities emerging from the African Continental Free Trade Area (AfCFTA).
As Kenya awaits the Association of African Central Banks' decision, the bid to host PAPSS symbolizes a significant leap in the country's commitment to technological leadership and regional economic integration. If successful, Kenya's hosting of PAPSS could usher in a new era of streamlined and simplified trade transactions within Africa, positioning the nation as a pivotal player in the continent's fintech landscape.