By: Staff Writer
June 14, 2024
Pan-African Payment and Settlement System (PAPSS) is being piloted in The Bahamas and Barbados for wider Caribbean acceptance.
Denys Denya, executive vice president of the African Export-Import Bank (Afreximbank) said on a panel at the annual meeting for the bank being held at the Baha Mar that the PAPSS is “really meant to reduce” the need for foreign currency for international credit.
“We can use our own currencies to trade,” he said. If there happens to be arbitrage then that can be settled in a third currency. But Africa and the Caribbean can work together to strengthen their trade ties through finance.
John Rolle, governor of the Central Bank of The Bahamas, also said: “The pilot has been launched in Barbados and The Bahamas and we’re trying to get some of the other central banks involved.
“We’re going to go through the same experience of understanding the multi-lateral settlement process.”
It is expected once The Bahamas and Barbados moves past the human resources issue with introducing the PAPSS that more central banks would feel comfortable with the success of the pilot and move towards general acceptance of it.
Denya also told Caribbean Magazine Plus on the sidelines: “We have rolled it out to a number of central banks on the continent, we’ve signed up FinTechs and payments platforms on the continent.”
With Instant payment, participants no longer need to convert local currencies into hard currencies which then entailed the funds leaving Africa to be converted before being sent back again to the beneficiary bank – adding days to the transaction time. In addition, compliance, legal and sanctions checks are performed instantly within the system. Near-instant payments process within 120 seconds.
Denya also said: “The US dollar will always be there, the euro will always be there. But does it makes sense that neighbors need to have the US dollars in order to trade amongst themselves. It really doesn’t make sense.
“Africa is 55 countries, we buy from each other. There is demand for the same local currency in Nigeria and go to Ethiopia to buy and then go to Egypt and will go to Ghana and then will go to Zimbabwe.”