Follow Us on Google
Chief Executive Officer, Pan-African Payment and Settlement System (PAPSS), Mike Ogbalu III, has said that the platform has recorded more than 1,000 per cent growth in transaction volume and 125 per cent increase in transaction value since it began operations in 2022.
Ogbalu disclosed this during a media interface in Lagos at the weekend, explaining that the payment system was created to address one of the major barriers to intra-African trade, the difficulty and high cost of making cross-border payments.
He said Nigeria had played a pivotal role in the development of PAPSS, with the Central Bank of Nigeria (CBN) among the central banks that drafted the system’s by-laws.
PAPSS was created as part of efforts to boost African prosperity by facilitating trade across the continent.
“Africa’s trade with neighbours is significantly low. A number of factors contribute to lack of trade. Anything that impacts payment impacts trade but many things divide us commercially,” Ogbalu said.
“We then decide to build an infrastructure that will address the differences. AfCFTA has done well to harness our strengths and we ultimately created a payment system to drive prosperity”, he added.
He said PAPSS had since expanded its network to 30 countries, with 24 central banks connected to the system and plans to increase the number to 38 by the end of the year.
The system has board members drawn from the African Continental Free Trade Area (AfCFTA), the CBN and 15 other African central bank governors, reflecting its continent-wide ownership and mandate.
According to Ogbalu, PAPSS has also introduced an innovation layer and developed an artificial intelligence-powered fraud detection system to identify suspicious transactions.
He said the technology had helped to make transactions significantly faster, with payments now taking an average of seven seconds, compared with the original target of 120 seconds.
“Payments made in seven seconds, there’s international transactions even though we targeted 120 seconds. We’re averaging seven seconds,” he said.
He explained that transactions pass through several checks before the beneficiary receives the funds.
“The entire process is checked for suspicious transactions, check for liens and approve for the other party to receive value,” he said.
Ogbalu said the system had also created opportunities for new businesses while establishing a marketplace that had added value to participants.
“PAPSS has lowered its charges, increased transaction speed and expanded its network, while more transactions are now being conducted through digital channels rather than bank branches”, he said.
However, Ogbalu declined to provide the current transaction volume and value, saying the figures were still being discussed with the governing council for public disclosure.
“Transactions volumes. We’re still working with the governing council to know what to push out to the public. But a comprehensive report will be out after this year. That’s early next year. The payment system is growing well,” he said.
He nevertheless disclosed that transaction volume had grown by more than 1,000 per cent, while transaction value had risen by 125 per cent since the system’s inception.
On the challenges confronting PAPSS, Ogbalu identified inadequate awareness as one of the major obstacles to wider adoption.
Other News
“Awareness is one of them. This is important. We need to work on this,” he said.
He also pointed to country-level policies that sometimes restrict how cross-border payments can be made.
“We have issue of country-level policies where some countries insist payment must be in certain currencies even when we can help,” he said.
Another challenge, according to him, is the fear among some regional payment systems that PAPSS could render them irrelevant.
“Cannibalisation is also feared where PAPSS is feared to kill existing regional payment systems. We said they can use theirs for their regional and use PAPSS for anything outside the region,” Ogbalu said.
He also referred to what he described as “invisible hands” working against the system, while noting that Africa had achieved significant progress despite the challenges.
“We’re also fighting battles with invisible hands,” he said.
Ogbalu said the scale of PAPSS was significant, given Africa’s 1.4 billion people spread across 54 countries.
He said the system was connected to national payment switches across the continent and was being supported by 28 central banks within its network.
The CEO also disclosed that other regions were studying PAPSS as a model for payment integration.
“The Caribbean community is replicating what we have done and getting integration into our system,” he said.
Looking ahead, Ogbalu said the second phase of PAPSS would focus on deepening the value created within Africa while expanding links with major global economies.
“Phase 2 is all about deepening the value created. There’s lots of interest from global partners like China, Brazil, India etc and we’re connecting with those partners as we need to expand beyond Africa,” he said.
He said the expansion was consistent with the objectives of Agenda 2063 and AfCFTA, as Africa seeks to increase intra-African trade and reduce dependence on external payment infrastructure.
On emerging technologies, Ogbalu said cryptocurrency and blockchain technology were becoming increasingly important to the financial system.
“Crypto and block chains. They have come to stay. CBN and SEC have been very proactive in this. We are determined to support every means of transaction,” he said.
He said the 24 central banks that were yet to join PAPSS would eventually come on board, although some were still considering political, regulatory and control issues.
“The only big market we don’t have is South Africa and we’re engaging with them and now till the next five years we shall have 100 per cent adoption,” Ogbalu said.
