United Nations, November 26 (IPS)-When Fidelis Adele, CEO of Freetown-based printing and communications company Solid Graphics, needed to order some printing equipment from Nigeria in September, he paid an additional $10,000 on top of the bank 165 USD was transferred to the seller. However, it takes three days for the money transferred to Sierra Leone to be credited to the recipient’s account in Nigeria.
“I paid a transfer fee of $30, a SWIFT fee of $35, and another $100 in bank charges,” Adele told Africa Revitalization. SWIFT stands for Global Interbank Financial Telecommunications Association, which is a global network for processing international payments.
Adele did not try to use financial services companies such as Western Union or MoneyGram because “the exchange rates of these companies are too bad.”
Another option is to fly to Lagos with physical cash, a three-hour drive. “I have done this several times,” he said, “but unless the amount is huge, it is not cost-effective and risky.”
Traders across Africa have also experienced similar ordeals when buying goods or services across borders. In the process, they lost precious time and money.
The chairman of the committee, Benedict Oramah, said that this cumbersome and time-consuming process “costs us about $5 billion annually.” African Export-Import Bank (Afreximbank), he said in an interview with “Africa Revitalization”: “We are a poor continent. We should not waste money like that.”
Payment system is online
In order to solve this situation, Afreximbank cooperated with the secretariat of the African Continental Free Trade Area (AfCFTA) to launch Pan-African Payment and Settlement System (PAPSS), a platform that promotes instant cross-border payments in local currencies between countries.
When using WAMZ for the pilot, Professor Oramah said: “The six WAMZ countries use different currencies. One of them is a French-speaking country and the other is an English-speaking country. You have a large economy like Nigeria, and then you have more Small economy. So anything that can go wrong in other parts of Africa will go wrong in WAMZ, and we will be able to solve it in the pilot phase.”
The operational deployment of PAPSS was announced at the end of September, which means that the central banks of various countries that work as clearing agents can now coordinate with Afreximbank, which is the main clearing agent and provider of settlement guarantees and overdraft facilities.
Afreximbank provided US$500 million in services to West Africa and intends to provide another US$3 billion for PAPSS operations throughout Africa.
Analysts predict that by the end of 2021, African traders, especially those in West Africa, will begin to use the platform.
Oramah, who is based in Cairo, Egypt, explained the obstacles facing African businessmen in a personal way: “I want to send money from Egypt to Nigeria. It passes through the corresponding bank in a country outside of Africa before arriving in Nigeria. I pay the fee before the Nigerian gets it.
“And it takes time. Sometimes it takes weeks. So we calculated the damage this caused to the African continent — forget the time — Africans spend $5 billion a year.
“Also, if I’m in Egypt and I want to watch my favorite Nollywood movie, I might have to send money in US dollars. But PAPSS will change this for you. All you need to do is use Nigerian Naira to send Nigerian producers Payment.”
Mike Ogbalu, CEO of PAPSS, said that during the West African pilot phase, bank accounts in different countries were debited and credited within 10 seconds. He ensures that he has powerful technology that can handle large transactions.
How PAPSS works
Using PAPSS to send money is a five-step process:
- • The first step is for the individual to issue a payment instruction to the local bank or payment service provider. • Second, the bank or payment service provider sends instructions to PAPSS. • Third, PAPSS verifies payment instructions. • Fourth, after successful verification, PAPSS will forward the instruction to the beneficiary’s bank or payment service provider. • Finally, the bank or payment service provider pays the transferred funds to the beneficiary in local currency.
When announcing the launch of PAPSS, Afreximbank stated that by “simplifying cross-border transactions and reducing their reliance on hard currency, PAPSS will significantly promote intra-African trade.”
Intra-African trade is currently only 17%.
It is expected that PAPSS will also increase the added value of products, create employment opportunities and increase the income of traders.
Wamkele Mene, Secretary-General of the AfCFTA Secretariat, stated that PAPSS will lead to efficient cross-border trade transactions and put Africa on a new economic track.
“Africa has 42 currencies. We want to ensure that Ghanaian traders can transfer Ghanaian cedi to their counterpart in Kenya, who will receive Kenyan shillings,” Mene told Africa Revitalization earlier. interview.
Adele agrees that PAPSS will help his business. “If I could take the Leones to a bank here, pay for the printing products in Nigeria, and then immediately deposit the money into the beneficiary’s account in Nigeria, it would be great,” he said.
Until told Africa Revitalization, Adele is not aware of PAPSS, which highlights the communication challenge of raising awareness of the platform among African internal traders.
However, Oramah pointed out that a marketing and promotion campaign for PAPSS is underway, and it is hoped that by the end of the year, African traders will be able to obtain enough information to use the system.
Source: Africa Revitalization, reporting and reviewing many different aspects of UN involvement in Africa, especially within the framework of the New Partnership for Africa’s Development (NEPAD).
© Inter Press Service (2021) — All rights reservedOriginal source: International News Service