O Pan African Payments and Settlement System (PAPSS) it is a continental platform that will allow instant and cross-border payments in local currencies between African countries, of which Angola is also a part.
For experts, the PAPSS is a kind of Visa and was developed by Afreximbank – African Bank of Exports and Imports for the African Continental Free Trade Area (AfCFTA), and where in today’s MenosFios Office we will show its functionalities and how central banks of African countries are participants directly from that platform.
PAPSS: Its Functionalities
Firstly, PAPSS is a platform whose system is designed to support instant payments in local currencies to be “fit for purpose” of the needs of member countries.
Its core financial market infrastructure was created to support payment arrangements, with the aim of expanding the international trade of African states, thereby facilitating Africa's economic and financial integration. It should also be noted that it will also support the safe and efficient flow of payments across the African continent.
The centralized payment and settlement system, PAPSS, is to be operated independently from domestic payment systems.
The tool includes instant payment in local currencies and settlement based on agreed settlement currencies.
The PAPSS will operate 24 hours a day, 7 days a week, with continuous availability of standardized messages with the norm ISO20022.
BUT: African PAPSS payment system up and running
Central Banks are Direct Participants
As we mentioned above, Afreximbank is the African financial institution that is implementing the PAPSS, based on the agreement signed with the African states, on July 7, 2021, in Niamey, Niger, at the 12th Extraordinary Summit of the Assembly of the African Union
Along with Afreximbank, central banks are direct participants in the platform, functioning as settlement and technical connectivity agents, in addition to providers/aggregators.
Commercial banks, ancillary system providers, money transfer operators, card schemes, securities settlement systems, clearing and settlement, are the indirect actors of PAPSS.
The definitive liquidation of the PAPSS is supported in the amount of 500 million dollars for the pilot of the WAMZ – West African Monetary Zone – and three billion dollars at the continent level.
The PAPSS was co-created and implemented in collaboration with central banks, in addition to being regulated by central banks through the PGC-Plano Geral de Contas.
How does PAPSS work?
No High Level Seminar seminar, which took place in the country's capital, Luanda, on the way to a week and attended by the secretary general of the AfCFTA, Wamkele Mene, and members of the Angolan Executive, several examples of how transactions work were presented.
For example, if a mechanical appliance dealer located in Angola would like to purchase mechanical appliances from a dealer in Nigeria, Angolan and Nigerian commercial banks, participants in PAPSS, are involved.
In short, the main objective of the PAPSS is that Africa can increase intra-African trade, facilitate economic and regional integration, as well as reduce the cost of cross-border payments across Africa.
Of the 55 African countries, 54 have signed the AfCFTA Agreement, with the State of Eritrea the only remaining one.
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This was the episode of Consultório MenosFios this Sunday, where we hope it will be useful for anyone and everyone who wants to know about the features of the PAPSS platform. Now, we ask our readers to comment on it and to contribute with additional information they deem necessary on this same topic.
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