Millions of African businesses are set to benefit from opportunities in the African Free Trade Area (AfCFTA) as MFS Africa, one of Africa’s largest digital payments network announced that it has joined the Pan-African Payment and Settlement System (PAPSS) network. PAPSS which is the newly established African cross-border and financial markets infrastructure, facilitates the clearance, payment and settlement for intra-African trade payments.
“At MFS Africa we have always believed that Africans are not limited by borders and that their money should not be either. The interchangeability of African currencies is still very limited after decades of independence, meaning that intra-Africa trade too often relies on hard currencies, hampering the growth of intra-African trade and our continent’s economies,” said founder and CEO of MFS Africa, Dare Okoudjou
“By making cross-border payments affordable and easier, PAPSS gives Small and Medium-sized Enterprises (SMEs), entrepreneurs and traders easier access to the formal payments services that will help them grow their businesses. Direct currency tradability and interchangeability removes many of the barriers to intra-African trade and investments, facilitates the natural directions of trade flows amongst African countries and regions, and makes borders matter less,” he adds.
,CEO of PAPSS, Mike Ogbalu III described Africa as the global leader in mobile money services adding that recent studies have found that 64% of the daily global transactions through mobile money platforms in 2020 happened in sub-Saharan Africa. According to him this demonstrates how mobile money services play a key role in the economic growth of the continent and facilitates financial inclusion. He also adds that partnering with MFS Africa will open the way for millions of more cross border mobile money transactions and mark a new phase in driving the benefits of the AfCFTA.
According to Afreximbank, the pan-African multilateral trade finance institution, over 80% of African cross-border transactions originating from the continent’s banks are currently cleared and settled offshore which creates inefficiencies and increases the cost of African cross-border payments.
The PAPSS network, which is an initiative spearheaded by Afreximbank and supported by the African Union aims at increasing intra-African trade and commerce by simplifying and reducing the cost of clearing and settling between African countries through its centralized payment and settlement infrastructure. PAPSS is set to enable both payment and settlement to be made in the respective local currencies of the buyer and seller which will result in a reduction in the administration, cost and time taken to make cross-border payments, resulting in saving of an estimated $5BN in transaction costs every year for Africa.
MFS Africa’s network provides mobile money integration at scale in Africa. Mobile money and last mile users who are often under banked stand to gain most from these partnership with over 320 million people across 35 African markets expected to trade easily through seamless and borderless possibilities for trade and transaction.