Africa Unlocks Local Currency Payments

The reliance on hard currencies like the U.S. dollar for intra-African trade has annually cost the continent an estimated $5 billion in currency conversion fees and exposed businesses to the volatility of global exchange rates. This system required payments to be routed through external clearing centers, adding days to settlement times and increasing banking fees. The Pan-African Payment and Settlement System (PAPSS), an initiative of the African Export-Import Bank (Afreximbank) and the African Union, directly addresses these issues. It functions as a centralized financial market infrastructure, enabling instant, real-time payments in local currencies across the continent. By connecting national and regional instant payment systems, like Kenya's Pesalink, PAPSS creates a network of networks. The partnership with Pesalink links over 80 Kenyan financial institutions to more than 160 commercial banks and fintechs on the PAPSS platform. This allows a business in Kenya to pay a supplier in Nigeria in Kenyan Shillings, with the supplier receiving the funds in Nigerian Naira in near real-time. This shift to local currency settlement significantly reduces transaction costs, with total payment frictions potentially falling to around 1% compared to 10-30% for some USD-mediated transactions. Settlement times are cut from several days to seconds, directly impacting the cash flow and working capital of small and medium-sized enterprises (SMEs). For payment orchestration platforms, this creates a new paradigm. The complexity of managing multiple currency corridors and hedging against FX risk is dramatically simplified. This allows platforms to offer more competitive pricing, faster settlement to their merchants, and embed trade finance solutions more efficiently, turning payments into a stronger revenue driver. This new infrastructure is a foundational layer for the African Continental Free Trade Area (AfCFTA), which aims to create a unified market of over 1.2 billion people. By removing payment friction, PAPSS is designed to boost intra-African trade, which has historically been low compared to other continents. The model mirrors the move towards real-time payment systems globally, but with a crucial difference: it is designed to foster financial autonomy and reduce the continent's vulnerability to external economic shocks and the policies of foreign central banks. For sales leaders, the key takeaway is the shift in conversation from cost-saving to value-creation. Instead of focusing solely on reducing transaction fees, the dialogue can now center on how instant, local-currency payments unlock new market expansion opportunities, improve supply chain efficiency, and enable the development of new financial products for a more integrated African market.