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Launched in 2021, PAPSS processes, clears and settles cross-border trade payments on behalf of banks and other service providers
ANALYSIS | AGENCIES | The African Export-Import Bank (Afreximbank) is advancing plans to establish a single electronic window for importers and exporters on the continent, signing up dozens of commercial banks to the initiative.
Last year, Afreximbank introduced the Africa trade gateway (ATG), saying it would give users access to five digital platforms, including customer due diligence solution Mansa, the Pan-African Payment and Settlement System (PAPSS) and e-commerce platform Africa trade exchange.
Speaking on the sidelines of GTR Cairo, Obinna Ejimofo, senior manager for digital business at Afreximbank, said the ATG is “progressing well” and has “surpassed” the bank’s expectations.
“We’ve launched a number of initiatives over the last four to five years… and found ourselves relatively stretched thin in terms of driving them into individual growth,” Ejimofo told Global Trade Review (GTR), a London-based publisher and event organizer for the global trade, commodity, and export and supply chain finance industries.
“What we’ve done… is pulled all of these solutions under one roof, that’s the Africa trade gateway.”
He said “close to 3,000” counterparties are now onboarded and trading on ATG’s marketplace since its launch.
“We have RFQs [requests for quote] from buyers within the platform worth about US$2.1bn. This is in terms of goods that they want to buy. It’s about finding suppliers and matching them to exporters,” he said.
Afreximbank’s focus is now on onboarding commercial banks as they will help accelerate development, Ejimofo says. “We started from zero with ATG at the beginning of the year in January, and now we have 86 banks signed up. Each of them can bring up to 150 of their top trading clients with them, so you can imagine the multiplier effect. And by the end of the year, we’re confident of reaching 100.”
According to Ejimofo, this approach will also ensure African importers and exporters have greater confidence in their trading counterparts.
“This is the most important thing… that you have trusted counterparties who are backed by their banks. Within the ecosystem, a company will be able to find other companies who have passed the KYC of their respective banks, in their respective markets.”
“It’s been phenomenal…. Our initial idea was to have about 40 banks by the end of the year,” he said.
Nevertheless, he says the “challenge” will be the process of onboarding the trading clients of African banks into the digital portal, “training them up, and then enabling them to get those transactions going”.
PAPSS development
As well as a marketplace, importers and exporters active on the ATG will have access to the PAPSS solution.
Launched in 2021, PAPSS processes, clears and settles cross-border trade payments on behalf of banks and other service providers. It is available in at least 13 countries whose central banks have joined the system, including Tunisia, Ghana, Kenya, Malawi, Nigeria, Rwanda, Zambia and Zimbabwe.
Afreximbank has enhanced the PAPSS solution in recent months to also include a currency marketplace, allowing companies to exchange their local currency positions rather than using dollars.
“We have the original version of PAPSS, which enables instant payments and now we have a local currency marketplace. We have two solutions under the PAPSS umbrella to enable the movement of funds between markets in Africa,” said Ejimofo.
He declined to specify the volumes of activity recorded via PAPSS to date, but said usage has “taken off” since the marketplace was launched in August. Over 150 commercial banks are signed up to the platform.
“We’ve focused on the corporate treasury market and operating through the banks… There are airlines, reinsurance companies and others all participating because they’re now able to unlock funds that they’ve had trapped from ticket sales or other proceeds in multiple markets.”
