UNITED NATIONS, Nov 26 (IPS) — When Fidelis Adele, the CEO of Freetown-based Solid Graphics, a printing and communications company, needed to order some printing equipment from Nigeria in September, he asked for an additional $165 on top of a $10,000 bank. paid. Transfer to seller. Yet it took three days for the money transferred in Sierra Leone to be credited to the beneficiary’s account in Nigeria.
“I paid $30 as transfer fee, $35 as SWIFT fee and another $100 bank fee,” Adele told Africa Renewal. SWIFT stands for Society for Worldwide Interbank Financial Telecommunication, a global network that processes international payments.
Adele did not attempt to use financial services companies like Western Union or MoneyGram because “the exchange rate for those companies is simply bad.”
Another option was to fly to Lagos, a three-hour journey, carrying physical cash. “I’ve done this many times,” he said, “but it’s not cost-effective unless it’s a huge amount, and it’s risky.”
Merchants across Africa experience similar payments for goods or services across borders. In the process they lose valuable time and money.
This cumbersome and time-consuming process “charges us about $5 billion every year”, according to Benedict Ormah, president of African Export-Import Bank (Afraximbank), who said in an interview with Africa Renewal: “We are a poor continent. We should not waste money like this.”
Payment System Launched
To address the situation, Afraximbank has partnered with the African Continental Free Trade Area (AFCFTA) Secretariat. Pan-African Payment and Settlement System (PAPSS), a platform that facilitates instant cross-border payments between countries in local currencies.
On using WAMZ to pilot, Prof. Ormah says: “The six WAMZ countries have different currencies. One of the countries is Francophone and the other is Anglophone. You have big economies like Nigeria and then you have smaller economies. So, whatever may have gone wrong in other parts of Africa, would have gone wrong in the WAMZ, and we would be able to address it during the experimental phase. ,
The operational rollout of PAPSS was announced in late September, meaning that countries’ central banks, which will be clearing agents, can now coordinate with Afreximbank, the main clearing agent and provider of settlement guarantees and overdraft facilities .
Afreximbank donated $500 million to serve West Africa and intends to provide another $3 billion for the Africa-wide PAPSS operation.
Analysts expect African traders, especially those in West Africa, to start taking advantage of the platform by the end of 2021.
Orama, who is based in Cairo, Egypt, explains the obstacles facing African traders personally: “I want to transfer money from Egypt to Nigeria. It goes through the respective bank in a country outside Africa before arriving in Nigeria. I pay the fee before meeting the person in Nigeria.
“And it takes time. Sometimes it takes weeks. So, we calculated how much the continent cost – forget about time – it cost Africans $5 billion a year.
“Also, if I’m in Egypt, and I want to watch my favorite Nollywood movies, I’ll probably have to pay in US dollars. But PAPSS changes that for you. You only need to pay the Nigerian producer in Nigerian Naira. the wanted. “
Mike Ogbalu, CEO of PAPSS, says that during the experimental phase in West Africa, bank accounts in various countries were debited and credited within 10 seconds. They assure a robust technology that can handle large transactions.
how does paps work
Sending money using PAPSS is a five step process:
- • The first step is when a person issues a payment instruction to their local bank or payment service provider. • Second, the bank or payment service provider sends instructions to the PAPSS. • Third, PAPSS verifies the payment instruction. • Fourth, on successful verification, PAPSS will forward the instructions to the beneficiary’s bank or payment service provider. • Finally, the bank or payment service pays the transferred money to the beneficiary in the local currency.
Announcing the rollout of PAPSS, Afreximbank states that “by simplifying cross-border transactions and reducing the reliance on hard currencies for these transactions, PAPSS is poised to significantly boost intra-African trade.”
Intra-African trade currently stands at just 17 percent.
PAPSS is also expected to increase the value addition of the products, generate employment and lead to higher income for the traders.
Vamkele Mene, Secretary General of the AfCFTA Secretariat, said that the PAPSS will lead to efficient cross-border trade transactions and put Africa on a new economic trajectory.
“Africa has 42 currencies. We want to ensure that a trader in Ghana can transfer the Ghanaian cedi to a counterpart in Kenya that will receive the Kenyan shilling,” Mayne told Africa Renewal earlier. Interview,
Adele agrees that PAPSS will help her business. “If I can take Leon to a bank here and pay for printing products in Nigeria, and the money is immediately deposited into the beneficiary’s account in Nigeria, that would be extraordinary,” he says.
until briefed by Africa Renewal, Adele did not know about PAPSS, underscoring the communication challenge of raising the awareness of inter-African traders about the platform.
However, Orama noted that a campaign is underway to market and promote PAPSS, hoping that by the end of the year African traders will be sufficiently informed to use the system.
Source: Africa Renewal, which reports on and examines many different aspects of United Nations involvement in Africa, particularly within the framework of the New Partnership for the Development of Africa (NEPAD).
© Inter Press Service (2021) — All Rights ReservedOriginal Source: Inter Press Service