The Central Bank of Kenya (CBK) has officially joined the Pan African Payments and Settlement System (PAPSS), enabling firms in Kenya to execute all trade and financial transactions with others in the rest of Africa. CBK becomes the 10th African central bank to join PAPSS.
CBK joins a list of other African monetary authorities that are already on the PAPSS platform include the Central Banks of Nigeria, Liberia, Guinea, Djibouti, The Gambia, Bank of Sierra Leone, Reserve Bank of Zimbabwe, Bank of Zambia, and Bank of Ghana.
In Kenya, commercial banks already on the PAPSS network include UK-based Standard Chartered Bank of Kenya(SCBK), Togolese-headquartered Ecobank, and Kenyan-owned Regional giant KCB. Ecobank and KCB signed up to PAPSS in June this year.
By the end of 2025, all commercial banks in Africa are expected to sign with PAPSS. Currently, 28 commercial banks have signed up. West Africa has the most with 12 Ghanaian banks and 11 Nigerian Banks.
Kenya’s Cabinet Secretary, Ministry of Investments, Trade and Industry Moses Kuria said on his Twitter handle that the PAPSS platform will enable Kenyan firms to trade with their peers from other African Member States using local currencies, a major boost for the African Continental Free Trade Area (AfCFTA)” wrote Kuria.
The PAPSS platform was developed in collaboration with the African Export-Import Bank (Afrexim Bank). Its objective is to enhance trading under the Africa Continental Free Trade Area (AfCFTA).
There is a deadline of 2024 upon which all African Central Banks are expected to onboard the PAPSS network.
With instant payment, participants no longer need to convert local currencies into hard currencies. Hence, one can send money through a bank in the PAPSS network and the recipient can withdraw in local currency.
Usually, sending money across the continent can entail the funds leaving Africa to be converted before being sent back again to the beneficiary bank.
The platform was developed in collaboration with the African Export-Import Bank (Afrexim Bank). Its objective is to enhance trading under the Africa Continental Free Trade Area (AfCFTA).
PAPSS, formally launched in January 2022 is a digital centralized payments and settlement system that allows firms in Africa to settle their intra-African trade transactions in their own currency, thus reducing the cost of trade transactions.
Previously, African companies and their local banks used correspondent banks – often outside of Africa – to settle payments between two African currencies in a third, external currency, usually dollars or Euros. This created foreign exchange and liquidity requirements for individual African Central Banks.