The Pan African Payment and Settlement System (PAPSS) and the African Securities Exchange Association (ASEA) have signed a memorandum of understanding (MOU) to enhance collaboration and co-operation in promoting cross-border payments of capital markets infrastructure in Africa.
For a long time, investors doing business in Africa have struggled with making and settling cross-border payments. Payments take a long time to complete, are expensive since the existing environment necessitates the use of correspondent banks outside of the continent, and are done in foreign currencies (USD or Euro).
Because of this, African Export and Import Bank (Afreximbank) and the African Continental Free Trade Area (AfCFTA) Secretariat developed PAPSS, which enables instant cross-border payment in local currency.
Through the umbrella of ASEA, with nine exchanges and a combined market capitalization of $1,5-trillion, PAPSS provides an opportunity as the payment system to further enhance the African Exchanges Linkage Project (AELP), a flagship project of ASEA to facilitate cross-border trading of securities in Africa.
PAPSS has started a period of fast deployment of its system throughout all African nations, having already gone live in the countries comprising the West African Monetary Zone (WAMZ), namely Nigeria, Ghana, Liberia, Gambia, and Guinea. As a result, Zimbabwe, Zambia, and Djibouti have recently joined the network and will soon be operational.
The partnership with ASEA will also facilitate the deployment of PAPSS across the ASEA member nations.
Commenting on the signing, the CEO of PAPSS, Mike Ogbalu III, says: “PAPSS supports a wide variety of use cases, including cross-border retail and trade transactions for individuals and corporations and cross-border investments with the African Stock Exchanges. Consequently, working with ASEA, which pioneered the AELP with cross-border securities trading as a central tenet, is a significant step towards the rollout of PAPSS throughout the continent.
“This partnership is a demonstration of our commitment to driving trade flows and economic growth in Africa. Through our collaboration, we aim to create a reliable and efficient payment system that will enable investors to easily trade across different stock exchanges on the continent.
“Our immediate task is to create a workforce between PAPSS and ASEA as soon as possible to identify ways to facilitate the transfer of funds across ASEA member African Stock Exchanges. To that end, I’d like to extend an invitation to the relevant capital markets stakeholders to join us in this ground-breaking venture for the African business and investment communities.”
The president of ASEA and CEO of Botswana Stock Exchange, Thapelo Tsheole, says: “We are delighted to partner with PAPSS on this important initiative. Our capital markets integration initiative through the AELP will play a critical role in deepening Africa’s capital markets and promoting cross-border investment. PAPSS’s expertise in payment settlement will be instrumental in the cross-border transfer of funds among the participating exchanges.”