Egypt has officially joined the Pan-African Payment and Settlement System (PAPSS), a groundbreaking initiative by the African Export-Import Bank (Afreximbank) aimed at streamlining cross-border transactions across the continent. The Central Bank of Egypt (CBE) will lead the country’s participation in this system, which is expected to enhance financial integration, reduce transaction costs, and bolster intra-African trade.
The announcement, detailed in a report from Egypt’s State Information Service, underscores the nation’s commitment to deepening its economic ties with other African countries. The move is a significant step toward fostering regional trade, aligning with the African Continental Free Trade Area (AfCFTA) objectives, and positioning Egypt as a key player in the continent’s economic integration agenda.
PAPSS, developed by Afreximbank, is designed to address the complexities and inefficiencies of cross-border payments within Africa. Traditionally, such transactions relied on intermediaries outside the continent, resulting in high fees, long processing times, and exposure to exchange rate risks. PAPSS eliminates the need for foreign intermediaries by enabling instant payments in local currencies across participating countries.
“Joining PAPSS is a pivotal move for Egypt. It streamlines payments, cuts costs, and accelerates trade flows, bringing us closer to a unified African market,” said a representative from the Central Bank of Egypt.
Egyptian banks, under the oversight of the CBE, will now integrate into this system, enabling businesses and individuals to conduct transactions more efficiently with their counterparts across Africa. The system is expected to significantly boost trade volumes by making it easier for small and medium-sized enterprises (SMEs) to participate in cross-border commerce, a vital engine for economic growth.
PAPSS has already attracted significant participation, with central banks from 14 African nations and over 50 commercial banks joining the system. The initiative complements broader efforts under the AfCFTA, which aims to create the world’s largest free trade area by eliminating barriers to trade and investment across Africa.
For Egypt, the second-largest economy in Africa, joining PAPSS is a strategic move that aligns with its ambitions to expand trade and investment links across the continent. As a major industrial and trade hub, Egypt stands to benefit from the enhanced efficiency in payments, which could lead to increased exports of goods and services to African markets.
The system also aligns with Egypt’s long-standing efforts to strengthen ties with sub-Saharan Africa. By reducing the complexities of financial transactions, PAPSS will encourage greater collaboration and economic exchange between Egypt and its African neighbors, fostering a more interconnected and resilient regional economy.
One of PAPSS’s most significant advantages is its ability to reduce transaction costs, a critical barrier for African businesses engaging in cross-border trade. By processing payments in local currencies, the system eliminates the need for costly currency conversions and dependency on foreign currencies like the US dollar or euro.
This cost efficiency is expected to particularly benefit SMEs, which often face prohibitive costs when engaging in international trade. Additionally, the faster processing times enabled by PAPSS will reduce delays and enhance the reliability of cross-border transactions, further encouraging trade and investment.
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