PAPSS allows cross-border settlement in domestic currencies, offering relief to FX-starved economies and lowering the cost of doing business under AfCFTA.
With the Pan-African Payment and Settlement System gaining traction across the continent, looking to local-currency settlement is a way to ease chronic dollar shortages and cut the cost of cross-border trade,
The PAPSS was designed to tackle one of the most binding constraints to intra-African trade, dependence on hard currency for transactions between neighbouring countries.
Under the traditional system, a trader in Ghana buying goods from Nigeria often needs dollars to settle the transaction, even though neither party earns revenue in the US currency. That reliance has exposed African trade to FX volatility, rising correspondent banking fees and persistent shortages of foreign exchange in local markets.
PAPSS allows importers and exporters to settle transactions in their domestic currencies, with central banks handling the net settlement behind the scenes. Transactions are completed in seconds, compared with days under traditional correspondent banking arrangements.
The implications extend beyond convenience. Many African economies are grappling with tight dollar liquidity, driven by weaker export earnings, rising debt service costs and capital outflows. By reducing the need for dollars in regional trade, PAPSS could help conserve scarce FX reserves and lower pressure on exchange rates.
PAPSS is already live in several countries, with more than 160 commercial banks connected. Transaction volumes have risen sharply over the past year. According to PAPSS’ CEO Mike Obalu III, PAPPS has recorded a transaction growth of more than 2,000% year-on-year
For banks, local-currency settlement also opens up new revenue opportunities. Instead of routing transactions through offshore correspondent banks, African lenders can retain transaction flows within the continent, deepening relationships with corporate and SME clients engaged in regional trade.
The broader ambition is financial autonomy. PAPSS embeds compliance checks, messaging and settlement within African financial infrastructure, reducing reliance on systems outside the continent. This strengthens resilience at a time when global financial conditions are tightening.
Wider uptake by regional central banks, particularly in francophone West and Central Africa, would be a major inflection point.
If adoption accelerates, local-currency settlement could become one of AfCFTA’s most practical tools, not only for expanding trade but also for easing the dollar constraint that has long weighed on African economies.
