THE Secretary General of the African Continental Free Trade Area (AfCFTA), Wamkele Mene, has expressed disappointment over South Africa’s reluctance to ratify the Pan-African Payment and Settlement System (PAPSS), a crucial tool designed to cut trade costs and enhance the continent’s economic integration.
PAPSS, developed in collaboration with the African Union, allows businesses across Africa to conduct transactions in any of the continent’s 42 currencies without needing to convert through a third-party currency like the US dollar. This system could save African countries up to $5bn annually. Currently, 115 commercial banks and 15 central banks have joined PAPSS, yet Africa’s largest economy remains absent from the list.
‘I regret that South Africa has not yet adopted the Pan-African Payment and Settlement System because I think it is a political economy question,’ Mene told CNBC Africa. ‘I must confess, I am surprised that not more countries have joined PAPSS.’
Mene noted that the decision ultimately lies with the South African Reserve Bank but emphasised that South Africa stands to benefit the most from reducing trade costs and boosting intra-African trade, given its dominance in manufacturing across the continent, accounting for more than 80 percent of Africa’s manufactured goods trade.
The Africa Export-Import Bank has pointed out that more than 80 percent of intra-African payments currently go through financial systems in Europe or the United States—a remnant of Africa’s colonial past and the West’s economic dominance. Mene argued that PAPSS would help Africa gain autonomy over its trade relations and reduce this dependence.
‘If you look at the cost of a trade transaction across the continent, PAPSS charges $2 on a $500 transaction. In contrast, using SWIFT could cost $60 or $70. And PAPSS is instantaneous—it’s a digital platform, offering immediate transaction clearance. This system clearly benefits Africa,’ Mene explained.
The African Continental Free Trade Agreement (AfCFTA), launched in January 2021, is the world’s largest trading bloc by number of member states, aiming to create a common market with a combined GDP of $3.4 trillion, projected to grow to $16.5 trillion by 2035, according to the World Bank. The agreement has been ratified by 48 of Africa’s 54 territories, with Eritrea expected to join soon.
Mene stressed the importance of Africans believing in their institutions and mechanisms, stating, ‘We have to make that mental shift of not only believing in ourselves as Africans but also in the institutions and the mechanisms that we have introduced.’
Key players in PAPSS include central banks, which regulate and clear transactions, as well as commercial banks, fintech companies, payment service providers, and businesses across the continent. Afreximbank anticipates that the majority of Africa’s central banks will join PAPSS by next year, a vital step toward increasing intra-African trade, which currently lags behind other global regions.
‘This issue is not just about addressing Africa’s trade deficit; it’s about the sovereignty of the African continent,’ Mene said. ‘If today you upset someone in Washington or London, you could be excluded from SWIFT and unable to transact globally. So, this is not just about easing payments; it’s also about political sovereignty. It’s a political economy question.’
Mene’s remarks underscore the strategic importance of PAPSS for Africa’s economic future, as it seeks to reduce dependence on external financial systems and enhance its trade autonomy.
