Cairo-headquartered African Export-Import Bank (Afreximbank) has started reviewing Kenya’s bid to host a pan-African settlement house for intra-African trade deals, a top official said in Nairobi Wednesday.
Denys Denya, Afreximbank’s executive vice president for Finance, Administration and Banking services said the trade financier’s top decision-making organ has taken up Kenya’s application.
Central Bank of Kenya Governor Kamau Thugge disclosed in July, Nairobi’s proposal to host the pan-African payment and settlement system (Papss) which facilitates intra-African payments in different national currencies on the continent.
“The Kenyan government has decided to support the rollout of Papss. The President of Kenya [William Ruto] is actually championing this,” Mr Denya told reporters on the sidelines of a roadshow ahead of the third Intra-African Trade Fair (IATF2023) to be held in Cairo between November 9 and 15.
“There’s a governance council that is considering that proposal. The decision will be made shortly and communicated.”
The Papss system enables a trader in a participating country to instruct her local bank to pay in a supplier in a different country using the local currency.
Her bank then sends instructions to Papss to settle the payment through the local bank of the supplier in the currency of their jurisdiction in real-time.
Papss is tasked with doing validation checks before passing the instructions to the recipient bank.
Afreximbank launched the system in January 2022 following a trial phase on six central banks in West African Monetary Zone (Wamz) from October 2021.
Wamz countries — Nigeria, Ghana, Liberia, Guinea, Sierra Leone and The Gambia — joined Zambia, Zimbabwe and Djibouti on the Papss platform.
Dr Thugge had said a successful application to host the payment and settlement system will position Nairobi as a financial hub in the march towards establishing a single, common market on the continent under the African Continental Free Trade Area.
Kenya is amongst the African countries with the highest share of intra-Africa trade. For example, Africa accounted for 18.49 percent, or Sh622.56 billion, of Kenya’s Sh3.37 trillion total trade value in 2022, largely unchanged from 18.39 percent in the prior year.
“If you want to trade internationally, it’s not just about bringing down tariffs, but it’s about dealing with borders… transport logistics… [and] shipping industry,” Trade Principal Secretary Alfred K’ Ombudo said.
“It’s about making sure that your goods arrive competitively and ensuring that you’re able to package your goods according to the requirements of the foreign market.”
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