Ogbalu highlighted that airlines are a significant focus for the marketplace’s efforts to simplify the repatriation of earnings. According to an estimate by the global airlines trade association IATA, over $1 billion of their members’ revenues are currently blocked or trapped within Africa. The exchange is the latest innovation developed by PAPSS to achieve its wider mission: establishing a centralized instant payments platform that facilitates transactions starting in one African currency and concluding in another. According to Ogbalu, these transactions are currently completed in an average of seven seconds. Following formal approval from African heads of state in 2019, PAPSS launched local currency instant payments across English-speaking West Africa and Guinea four years ago. Since then, it has grown to encompass 16 countries across other regions, including North Africa. Its products aim to support the African Continental Free Trade Area’s (AfCFTA’s) goal of enhancing trade within Africa. One major objective is to phase out the US dollar as the intermediary trade currency among Africa’s more than 40 currencies. However, at present, nearly 50% of commercial payments leaving Africa are still settled in dollars, per data from the SWIFT payments network. The AfCFTA, Africa’s landmark agreement which created the world’s largest free trade zone in 2018, is expected to open up a $3. 4 trillion market.

Its purpose is to eliminate tariffs and other barriers to facilitate the free movement of goods across a continent home to approximately 1. 5 billion people. Despite a strong 12. 4% year-on-year increase in transaction values to $220. 3 billion, intra-Africa trade accounted for only a “paltry 14. 4%” of the continent’s formal trade in 2024, according to a recent trade report by Afreximbank. Analysts suggest that lowering transaction costs associated with major international currencies will help boost trade within Africa. While PAPSS could reduce trade and currency conversion expenses in Africa by $5 billion, its value extends beyond cost savings, AfCFTA secretary-general Wamkele Mene noted. “Trading in the US dollar or any other foreign currency has no place between African countries, ” Mene stated during the Afreximbank meeting. “We must trade using our own currencies to ensure the continent’s economic sovereignty and protect ourselves from the unpredictable geopolitical tensions affecting payments, ” he added. Previous efforts to improve cross-border payment efficiency for intra-Africa trade faltered due to a lack of political commitment, said Kenneth Ugwuanyi, head of transaction banking at United Bank for Africa Group, which operates in 20 African nations. The endorsement of PAPSS by African leaders has provided commercial banks with a solid institutional foundation to facilitate transactions within the continent more easily, he explained. The system seems to be positively impacting the profitability of banks that have adopted it. Ghana’s largest lender by assets, GCB Bank, reported that its cross-border trade transactions and small and medium enterprise client base both grew by roughly 25% last year, with a significant part of this growth driven by PAPSS, said George Fuachie, head of investor relations at the bank. A marketplace for African currencies faces a “chicken and egg” dilemma because increased intra-African trade is needed to stimulate demand for these currencies, Amaka Anku, head of Eurasia Group’s Africa practice, told Semafor. It remains uncertain how the exchange will perform when demand does not match the supply of currencies from countries that have limited exports to other African nations, Anku added. “A market only functions when supply meets demand, ” she concluded.