The Reserve Bank of Malawi (RBM) says the Pan-African Payment and Settlement System (Papss) is expected to improve local firm’s efficiency and speed up settlement of payments between countries.
RBM spokesperson Ralph Tseka said this on Thursday following the roll-out of Papss, a revolutionalised financial market infrastructure to enable instant cross-border payments in local currencies between African markets.
He, however, said the decision to join the new initiative will be done in view of similar existing initiatives to avoid duplicating efforts.
Said Tseka: “This is a good initiative and Malawi has all along participated in regional integration initiatives.
“Currently, Malawi participates in the Comesa Regional Payment and Settlement System as well as the Sadc Regional Cross-Border Real-Time Gross Settlement and transactions are cleared on immediate basis initiatives which are all working well.”
At the continental level, he said Malawi is already participating in the Association of African Central Banks initiative, which is being implemented through the Southern African Development Community (Sadc) payments system project.
The Papss platform, championed by pan-African multilateral lender African Export-Import Bank (Afreximbank) and the African Continental Free Trade Area (AfCFTA) secretariat, is set to boost intra-African trade and underpin the implementation of the AfCFTA—a single continent-wide market for goods and services of 1.2 billion people with an estimated $3 trillion in combined gross domestic product.
Papss will also serve as a continent-wide platform for the processing, clearing and settling of intra-African trade and commerce payments, leveraging a multilateral net settlement system.
Its full implementation is expected to save the continent
about $5 billion (about K4.1 trillion) in payment transaction costs each year.
Alliance Capital Limited research manager Bond Mtembezeka, in an interview on Sunday, said the Papss system will facilitate smooth, convenient and quick settlement of funds between economies.
“This system does not take away the obligation of an economy to settle their counterpart,” he said.
The rollout of Papss follows a successful pilot phase in West African Monetary Zone countries, with live transactions
done in an instant.
Afreximbank president Benedict Oramah, who is also chairperson of Papss management board, is on record as having said that Papss is not positioned to replace existing regional and national payment systems, but to collaborate and work with them in better integrating African economies.
Papss is set to integrate the rest of the continent into this critical infrastructure by integrating national payment systems, regional payment systems and other financial services providers.
Papss was launched in 2019 in Niger at the 12th Extraordinary Summit of the African Union, which adopted it as a key instrument for the implementation of the AfCFTA.