In a significant move for African financial integration, the Kingdom of Morocco has officially joined the Pan-African Payment and Settlement System (PAPSS) as its 17th member.
This milestone was marked by the signing of the membership agreement by Bank Al-Maghrib, Morocco’s central bank.
The development aligns with the goals of the African Continental Free Trade Area (AfCFTA), aiming to enhance intra-African trade through real-time, cost-effective cross-border payments in local currencies.
What is PAPSS and Why Does Morocco’s Membership Matter?
PAPSS, developed by the African Export-Import Bank (Afreximbank) in partnership with the African Union and the AfCFTA Secretariat, is a centralised financial infrastructure designed to streamline cross-border transactions across Africa.
By enabling payments in local currencies, it reduces reliance on hard currencies like the US dollar or Euro, which often incur high costs and delays.
Morocco’s entry as the 17th member strengthens this network, adding its strategic position as a gateway between Africa and Europe, along with a robust banking sector.
This move is a testament to the growing trust in PAPSS as a solution to Africa’s payment challenges. With over 150 commercial banks and 14 national switches now connected, PAPSS is set to drive economic integration continent-wide.
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Boosting Intra-African Trade Under AfCFTA
The African Continental Free Trade Area (AfCFTA) seeks to create a single market for goods and services across 54 countries, with a goal to increase intra-African trade from approximately 15% to 25% by 2030.
Currently, about 80% of Africa’s trade occurs with external partners due to payment inefficiencies. PAPSS addresses this by facilitating seamless, real-time transactions, reducing costs, and minimising risks associated with foreign exchange.
Morocco’s participation is particularly significant given its expanding investments in banking, telecommunications, and agriculture across West and Central Africa.
This could enhance trade corridors, especially with neighbouring regions, promoting a more interconnected African economy.
How PAPSS Cuts Costs and Empowers Businesses
One of PAPSS’s core advantages is its ability to lower transaction costs, which have historically hindered small and medium-sized enterprises (SMEs) and informal traders.
By settling payments in local currencies, businesses can avoid the $5 billion annual loss attributed to foreign exchange fees and delays.
The system’s real-time processing capability, supported by a network of 150+ commercial banks and 14 switches, ensures faster settlements, empowering entrepreneurs and individuals across the continent.
This infrastructure not only benefits large corporations but also supports grassroots economic activities, aligning with AfCFTA’s vision of inclusive growth. As more countries join, the potential for a unified African market becomes increasingly achievable.
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Is PAPSS the Key to Unlocking Africa’s Economic Potential?
Africa’s economic potential is immense, with a young, growing population and abundant natural resources. However, fragmented payment systems and reliance on external currencies have long stifled progress.
PAPSS’s expansion, highlighted by Morocco’s membership, suggests a shift toward financial sovereignty and self-reliance.
The system’s ability to connect central banks, commercial banks, and fintechs could transform trade, investment, and economic resilience.
While challenges like regulatory hurdles and infrastructure gaps remain, the momentum is clear. With 17 countries now part of the network and ongoing innovations like the PAPSS African Currency Marketplace, the platform is gaining traction.
Experts believe that if adoption continues to scale, PAPSS could play a pivotal role in achieving AfCFTA’s ambitious trade targets.
Ronnie Paul is a seasoned writer and analyst with a prolific portfolio of over 1,000 published articles, specialising in fintech, cryptocurrency, and digital finance at Africa Digest News.
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