Africa pushes for payment systems sovereignty
Africa is pushing to wean itself off the reliance on payment systems put in place by the Western world to facilitate cross-border payments on the continent.
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As such, the continent is putting in place the relevant infrastructure that would enable each country to connect its payment system platforms with those of others on the continent.
Spearheaded by the African Continental Free Trade Area (AfCFTA), the initiative has the backing of all central bank governors in Africa.
With the continent grappling with the introduction of a single currency for almost 30 years, it has become necessary to have a payment platform that will help facilitate trade in line with the aim of the AfCFTA agreement. In line with this agenda, the AfCFTA secretariat, in partnership with the Afrexim Bank in 2020, launched the Pan African Payment and Settlement System (PAPSS) that allows individuals and businesses to make instant cross-border payments in more than 40 different African currencies.
This has helped in reducing the need for US dollars and other hard currencies in cross-border trade on the continent.
Despite the enormous benefits of PAPSS, not all African countries have been able to connect their payment systems with that of PAPSS and a recent study also indicated that about 50 per cent of small and medium enterprises were not aware of the system.
Payment sovereignty
Speaking at the just-ended 3i Africa Summit in Accra, the Secretary General of the AfCFTA Secretariat, Wamkele Mene, said it is about time the continent leveraged technology and innovation to advance its payments sovereignty.“42 currencies on the continent are too many and our reliance on platforms built elsewhere does not help.
“In 2019 alone, $20.5 billion worth of transactions were done on Swift so this question of the payment sovereignty of our continent is very critical,” he stated.
Digital trade protocol
The Secretary-General also noted that the AfCFTA secretariat was set up with one single mandate which was to advance and improve intra-African trade, adding that there were tools that the heads of state had set out to be used to achieve this.
He said in February this year, the heads of state adopted the protocol on digital trade, the first of its kind in the world.
“Today, we have a digital trade protocol to advance Africa’s technological and digital economy to improve millions of young Africans who are at the cutting edge of digital innovation,” he said.
He said the protocol on digital trade encompassed several provisions that had the potential to significantly position the continent as a global competitor.
“The heads of state have said they want data to move across the continent freely, we want to prohibit the localisation of fintech services.
“They also said at the heart of this protocol on digital trade must be inclusion. “We must therefore not impose duties and taxes, there must be free movement of digital trade and services,” he added.
The Deputy Governor of the Bank of Namibia, Ms L Dunn, speaking at the closing of the summit urged African central bank governors and policymakers to create an enabling environment that encouraged innovation that would further deepen the goal of payments sovereignty.
“So back home, I intend to work on the law and regulations that will help encourage innovation and drive investments that make an impact. She said African policymakers must create solutions that would unlock the full potential of the digitisation agenda in Africa.
“As policymakers and regulators, we are not doing enough to remove stifling policies and laws and regulations that are blocking the innovation needed for fintechs to prosper.“I am inspired and want to innovate and when I go back home, I want to tear down every law and regulation in my country that creates obstacles to unlocking the full potential of digitisation,” She stated.
She said the African continent must move together in the digitisation drive and leave no one behind, adding that “It doesn’t benefit us if some move forward and the rest are left behind.“We need to go back and create solutions that will unlock our full potential,” She said.