The African Continental Free Trade Agreement (AfCFTA) is a multinational free trade agreement that was established in 2018, signed in March 2018, and went into force on 30 May 2019, with trade beginning on 1 January 2021. It was signed by 54 of the 55 African Union member countries. Since the World Trade Organization (WTO) was founded, the free-trade zone has grown to be the world’s largest in terms of the number of member countries. The AfCFTA aspires to create a single common market, lower tariffs among members, and cover policy areas such as trade facilitation and services, as well as regulatory measures like sanitary standards and technological trade obstacles. The concept of AfCFTA might be a new development but the idea of free trade has existed over the years as goods are exchanged across all regions of the continent.

The Pan-African Payment and Settlements System (PAPSS) is a centralized cross border financial system introduced by the African Export – Import Bank (Afreximbank) to aid with payments within the continent. This payment system is designed and structured to make transactions faster, reduce costs in respect to cross border transactions and decrease liquidity requirements of central and commercial banks. PAPSS would simplify cross-border transactions, reduce reliance on third-party currencies, and increase intra-African commerce from 15% to 35% during a five-year period as stated by Nigeria’s Central Bank’s governor. He noted that it will improve the framework for the region’s prospective monetary union and allow firms to flourish and create wealth.

Before the introduction of PAPSS, cross border transactions were primarily made through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) platform. SWIFT is a system managed by the G-10 central banks that allows banks all over the world to communicate messages and execute cross border transactions.  According to the African Development Bank, 48% of settlement processes (the transfer of payments from a payer to a receiver via a central system) within Africa involve banks from outside the continent. This raises transaction costs and reduces the productivity of African enterprises. For example, if an entrepreneur in Ethiopia wishes to order a product from a supplier in Ghana, he or she must first obtain US dollars and then use a system that first routes the payment to the US before routing it back to the supplier’s financial institution in Ghana. The SWIFT system costs Africa over $5 billion per year and takes 2 to 14 days to complete the transaction.[1]


Over 80% of cross border and intercontinental transactions sent from Africa to anywhere within Africa and outside the continent are handled in the United States but have beneficiaries in other parts of the world. The Asia-Pacific and Europe (non-Eurozone) regions account for 52% of where payments are eventually transferred, while Africa accounts for only 17%. This demonstrates the role of US dollar clearing banks in intermediation. The reliance on third-party currencies such as the US dollar, British pound, and euro destabilizes Africa’s foreign exchange market and causes problems in the manufacturing sector.[2]

Users can also pre-fund their accounts before transactions are initiated. This pre-funding solution is offered to direct participants (mostly banks) who are obliged by their central banks to establish a real-time gross settlement (RTGS) account. In order to initiate transactions, indirect participants who do not have an RTGS account would require the assistance of a direct participant to fund or defund their PAPSS clearing accounts.

PAPSS payment systems settles all participating central banks within 24 hours of the initiation of the transaction which means that a bank gets credits and debits simultaneously and settled within 24 hours. PAPSS is also set to deliver harmonization across the continent through its comprehensive legal, regulatory and operational framework compromising standardized rules, formats and governance arrangements, harmonized Know-Your-Customer and Anti-Money Laundering procedures, payment confirmation and settlement finality. A precondition for participation in PAPSS is compliance with its set rules and standards.

GCB Bank Plc, one of Ghana’s leading banks, announced on 3rd March, 2023 that it had completed the first Pan-African Payment and Settlement System (PAPSS) client transaction in Ghana. A Ghanaian-incorporated firm initiated a supplier payment from GCB in Ghana Cedis to a beneficiary in Nigeria, who received the payment in Naira immediately.[3]



The commencement of the PAPSS financial system will help Africa become an open market for movement of goods through time and cost-effective transactions. PAPSS is an efficient payment system that will be relied on to make international and regional trades in local currencies without converting to another currency as the conversion will be done by the system internally. PAPSS will significantly reduce the time used to complete financial transactions. Resolving payment and settlement bottlenecks will help African currencies keep value while the region moves forward with the AfCFTA, a crucial economic union initiative. In conclusion, PAPSS is a game changing initiative in improving cross-border trade in Africa and this will generate a significant capital for Africa and Africans.



Disclaimer: This publication is for information purposes only and is not intended to constitute legal advice. If you require information on any matter discussed in this article, kindly reach out to the firm directly.


Nartey Law Firm is a leading corporate and commercial law firm in Ghana providing legal services to individuals, domestic and international businesses. Ensuring the success of our clients’ objectives is at the core of what we do.  Comprised of a dedicated team of lawyers with extensive experience in corporate, commercial and international law and litigation, we pride ourselves with the diligent execution of all client matters, whilst guaranteeing an uncompromising standard with respect to excellence in service delivery. Some of our focus areas are Real Estate, Trade and Commerce, Banking and Finance, Regulatory Advisory, Capital Markets and Mergers and Acquisitions.



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[1] https://www.premiumtimesng.com/opinion/532098-papss-a-crucial-payment-system-for-the-african-market.html?tztc=1

[2] https://www.premiumtimesng.com/opinion/532098-papss-a-crucial-payment-system-for-the-african-market.html?tztc=1

[3] https://papss.com/media/gcb-completes-first-papss-client-transaction-in-ghana/

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