The President of the African Import-Export Bank, Prof Benedict Oramah, on Tuesday said that the bank was set to domesticate Intra-African payments through the commercial launch of the Pan-African Payment and Settlement System (PAPSS).
Oramah who spoke exclusively with ARISE NEWS, noted that Africa was losing as much as $5 billion yearly because such a payment system does not currently exist, making intra-African trade very difficult.
He noted that as at today, Africa has about 42 currencies and roughly the same number of fragmented payment systems, stressing that transacting businesses under such conditions means the movement from one currency to the other.
“This has been costing the continent an estimated $5 billion a year for intra-regional payments. That had meant that payments sometimes took up to 14 days if they (ever) arrive.
“ In an age where foreign currency has increasingly become scarce, it will also cause a diversion of trade because to be able to buy something from your neighbour, you have to go and change it to another currency from somewhere else to be able to get the currency to pay for it.
“And we say this is not necessary. We want to domesticate all intra-African payments. We do not yet have a single currency, but we can domesticate the payment by using a multilateral debt settlement system to reduce the foreign currency content of the trade and make it easier for people to buy goods across borders and retain trade that is diverted just because of currency issues.
“ It will reduce significantly the cost of making payment across Africa. Payment is what will drive intra-regional trade because it’s through payments that you do a transfer of value. So, it it’s not just the issue of currency use.
“It’s also to integrate the infrastructure of all the payment systems that makes it easier for the farmer in Zambia to pay for Nollywood movies and stream Nigerian movies paying in Zambian Kwacha,” he pointed out.
He stated that for instance it will make it easy for Ghana to contract an Egyptian contractor to build roads and bridges and pay in Ghanaian Cedi.
“We are going to see a reduction in Sovereign Debts of many countries because of foreign currency because we will now start paying for services and infrastructure projects which we spend about $60 billion on the continent in African currencies.
“We complain today that we have difficulties in airlines flying all over Africa, but why will they fly when money is stuck in some countries because these countries do not have foreign currencies to pay?
“ If as we hope will happen very shortly, it is possible now for those airlines to get paid in the national currencies of their origin. That will reduce significantly these problems and then make it possible for them to open more routes to other African countries,” he added.
He stated one of the key takeaways from the recent Afreximbank annual meetings and its 30th anniversary celebration in Accra, Ghana, was that the event experienced a record number of attendees of over 5,000 persons from 90 countries , but noted that more would have come if not for logistics difficulties.
Oramah stated that the anniversary event also enabled Afreximbank to launch the Afreximbank group, consisting of the Afreximbank fund for export development in Africa, multilateral fund based in Kigali, Rwanda, the Afreximbank insurance management entity which enables the bank provide insurance services and other ‘ring-fence’ initiatives like the Pan African Payment and Settlement System towards the implementation of the African Continental Free Trade Area (AfCFTA).
He added that the PAPSS will enable the payment of intra-Africa trade in African currencies, noting that the Afreximbank due diligence repository platform was also launched, including other units like the African medical centre of excellence, among others.
Oramah also said it was also the first gathering of global Africans, with the Caribbean countries ably represented and that they came along with a broad spectrum of businesses and government agencies from the Caribbean.
The president said it also allowed Afreximbank showcase its financial performance, including a 36 per cent growth in gross revenue to about $1.5 billion and 18 per cent growth in net income growth of about $450 million, thanks to the strong support of the shareholders.
The Nigerian-born Afreximbank president added that the shareholders funds further increased to just under $6 billion, explaining that when combined with the capital, got close to about $10 billion.
Emmanuel Addeh in Abuja
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