Regional integration in Africa: Proposals for an Africa-wide payment system

Abstract

Regional integration remains a priority in Africa. Fuelled by the call of Pan-African leaders including Kwame Nkrumah and the recognition of the potential within the continent to transform intra-African trade and achieve global competitiveness, the Africa Continental Free Trade Agreement (AfCFTA) was conceived. The African Union, in collaboration with the Africa Export-Import Bank (AFREXIM), has accordingly proposed the Pan-African Payment Settlement System (PAPSS). This system is expected to facilitate crossborder financial flows in local currencies and in real-time across the region, address the multiplicity and inconvertibility of currencies, reduce transaction costs, and decrease the use of correspondent banks. The authors analyse the necessity of getting this system right, alluding to the theory of developmental regionalism. The article concludes with recommendations that could make this unified payment system formidable enough to enable direct and seamless transactions between Amari in Addis and Wale in Lagos.