African central banks to link payment systems to meet AfCFTA objective

The Bank of Ghana (BoG) has joined forces with all the central banks in Africa to deliver an integrated continental payment system to support trade within Africa.

The initiative is in line with the larger African Continental Free Trade Area (AfCFTA) objective of promoting intra-African trade.

The payment system is currently being developed and involves the linking of all the regional payment systems such as the Pan African Payment and Settlement System (PAPSS) and SADC-RTGS, a payment system for countries in the Southern African Development Community (SADC) and that of ECOWAS.

It is expected to promote efficiency in regional trade by facilitating the smooth flow of payments underpinning economic activities and fostering transparency and effectiveness in intra-African trade.

Ghana’s Central Banks Governor Dr. Ernest Addison indicated that given the right policies, Africa’s collective efforts at integrating existing national payment systems could enable firms on the continent to innovate, invest and create job opportunities.

He was speaking at the closing of the Ghana Academy of Arts and Sciences (GAAS) Forum 2022 in Accra last Wednesday evening.

“Together with digitalization, an integrated payment system will help Africa foster convergence of institutional framework and create a more regional financing ecosystem.

“Collectively, we are working to deliver an integrated and interoperable continental payment system by linking all the regional payments leveraging the PAPSS connectivity to enhance the power of digital payment for value creation,” he said.

The forum was on the theme: “African Continental Free Trade Area: Challenges and Prospects.”

The Governor spoke on the topic “Boosting the AfCFTA: The Role of Payment and Settlement Systems”.

In his view, an efficient and resilient payment infrastructure was fundamental to the promotion of intra-African trade.

He added that the decision by the BoG to develop payment systems was to foster competition among industry players.

The overall objective he explained was to drive innovation, and competition and provide consumers with choice at a lower cost for transactions.

“An example is the bank’s step to bring in the financial technology firms under its regulatory purview which has led to the expansion of digital services and helped bring the unbanked into the formal f financial system.

“Notwithstanding the national payment system, transactions between Ghana and other African countries may have to go to a third country which is not likely to be based on the continent,” he added.