Is PAPSS Finally Breaking Africa’s Reliance on Colonial Payment Systems?
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The Pan-African Payment and Settlement System (PAPSS), launched in January 2022, is reshaping how Africa conducts cross-border trade.
Developed by the African Export-Import Bank (Afreximbank) in partnership with the African Continental Free Trade Area (AfCFTA) Secretariat and the African Union, the platform addresses one of the continent’s longest-standing obstacles, Africa’s reliance on colonial payment systems that force transactions through external currencies such as the US dollar and euro.
The Weight of Colonial Payment Systems
For decades, Colonial Payment Systems tied African economies to financial institutions outside the continent. With 41 different currencies across 54 countries, intra-African trade often required settlements routed through foreign correspondent banks.
A common scenario shows the scale of the problem: a Ghanaian importer buying goods from a South African supplier would see cedis converted to US dollars, processed through a bank in New York or London, and then reconverted into rand.
Each stage added fees, delays, and liquidity risks. Businesses sometimes lost up to 30% per transaction, while the continent collectively lost about $5 billion annually to these inefficiencies.
This system also left central banks under pressure to hold foreign reserves and exposed businesses to exchange rate volatility, all of which limited Africa’s ability to trade with itself on fair terms.
What is the Pan-African Payment and Settlement System?
In simple terms, PAPSS is Africa’s first centralized infrastructure that allows cross-border trade to be settled instantly in local currencies.
Instead of routing payments through the dollar or euro, PAPSS connects central banks and commercial banks directly, ensuring that African businesses can pay each other without leaving the continent’s financial system.
The system was designed to support the African Continental Free Trade Area (AfCFTA), which aims to create the world’s largest single market by population.
How Does the PAPSS Work?
PAPSS operates as a centralized Financial Market Infrastructure (FMI) connecting the real-time gross settlement (RTGS) systems of participating central banks.
A typical transaction looks like this:
- A business issues a payment instruction in its local currency to its bank.
- The bank routes this to the national central bank and then to PAPSS.
- PAPSS validates and forwards the instruction to the beneficiary’s central bank.
- The recipient’s bank pays out in its local currency.
Settlement between central banks is handled daily through a netting process that resets balances to zero each day. The system, built on a StoneX cloud platform, reduces costs to around 1% per transaction and completes payments in seconds instead of days.
PAPSS Expansion and Adoption
Since its debut, PAPSS expansion has accelerated. Seventeen countries, including Nigeria, Ghana, and Algeria, are already integrated, along with more than 150 commercial banks.
Major banking groups such as Ecobank, Standard Bank, KCB Bank and United Bank for Africa have connected PAPSS to their networks, extending its reach to more than 40 African markets.
The initiative echoes plans reported under the headline “Pan-African group plans instant payment systems for 15 nations”, showing how regional institutions are investing in cross-border infrastructure to cut costs and improve efficiency.
Transaction volumes have risen sharply, with usage increasing ten-fold year-on-year. Analysts project that PAPSS could unlock a $1 trillion cross-border payment market by 2035, saving billions annually.
Intra-African trade has grown from 3.5% to 15% of total trade in a decade, with PAPSS transactions surging 10-fold year-on-year.
Launch of the PAPSS African Currency Marketplace (PACM)
In July 2025, the launch of the PAPSS African Currency Marketplace (PACM) added a new layer of functionality. Built with Interstellar, PACM addresses liquidity shortages and the issue of inconvertible currencies, which has left over $2 billion trapped in African markets.
PACM uses a blockchain-based, order book-driven system that allows direct exchanges between local currencies. By solving inconvertibility problems, it benefits industries like aviation and reinsurance, which often struggle with blocked funds.
Breaking Africa’s Reliance on Colonial Payment Systems
By removing correspondent banks from the equation, PAPSS directly addresses Africa’s Reliance on Colonial Payment Systems. Nearly 48% of African bank payments once relied on foreign intermediaries, inflating costs and reinforcing dependency.
Now, with PAPSS and PACM, African businesses can transact directly in local currencies, keeping more value within the continent. The system supports the African Union’s Agenda 2063, which envisions greater financial integration, a customs union, and eventually a single African currency.
Importantly, PAPSS has also been adopted outside Africa, with CARICOM central banks signing on in 2023. Algeria’s 2025 integration has further boosted the platform’s credibility
FAQs on PAPSS and PACM
- Which countries currently use PAPSS?
Seventeen countries, including Nigeria, Ghana, and Algeria, are already connected, along with more than 150 banks.
- How does PACM differ from PAPSS?
While PAPSS enables real-time payments in local currencies, PACM creates a transparent marketplace for currency exchange, solving liquidity and inconvertibility issues.
- What are the benefits for SMEs?
Lower costs (around 1% per transaction) and faster settlements make cross-border trade more accessible for small businesses.
- How much could PAPSS save annually?
Analysts project $5 billion in annual savings, unlocking a $1 trillion market by 2035.
- Is PAPSS legit?
Yes. With backing from Afreximbank, the African Union, and adoption by central banks and major commercial banks, PAPSS is a legitimate, secure, and growing payment infrastructure.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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