The Central Bank of Kenya (CBK) has taken a significant step by officially becoming a member of the Pan African Payments and Settlement System (PAPSS). This development enables Kenyan businesses to conduct trade and financial transactions seamlessly with counterparts across the African continent. CBK’s inclusion marks the tenth African central bank to join PAPSS.
CBK joins a distinguished group of African monetary authorities that have already integrated into the PAPSS platform. This includes the Central Banks of Nigeria, Liberia, Guinea, Djibouti, The Gambia, Bank of Sierra Leone, Reserve Bank of Zimbabwe, Bank of Zambia, and Bank of Ghana.
Within Kenya, several commercial banks are already active on the PAPSS network. Notable participants include the UK-based Standard Chartered Bank of Kenya (SCBK), Togolese-headquartered Ecobank, and the Kenyan-owned regional giant, KCB. Ecobank and KCB embraced PAPSS membership in June of this year.
Aiming for comprehensive participation, all commercial banks across Africa are expected to join PAPSS by the end of 2025. Currently, 28 commercial banks have signed up, with West Africa leading the way, featuring 12 Ghanaian banks and 11 Nigerian banks.
Moses Kuria, Kenya’s Cabinet Secretary for the Ministry of Investments, Trade, and Industry, expressed on Twitter that the PAPSS platform would empower Kenyan firms to engage in trade with counterparts from other African Member States using local currencies. This development is a significant boost for the African Continental Free Trade Area (AfCFTA).
PAPSS is a digital centralized payments and settlement system that aims to facilitate intra-African trade transactions using local currencies, thereby reducing the associated costs. Developed in collaboration with the African Export-Import Bank (Afrexim Bank), its primary objective is to enhance trading efficiency within the African Continental Free Trade Area (AfCFTA).
A notable benefit of the PAPSS platform is the elimination of the need to convert local currencies into hard currencies for cross-border transactions. This means that individuals can send money through a bank within the PAPSS network, and the recipient can withdraw the funds in their local currency. This streamlined process negates the requirement for funds to exit Africa for conversion before being sent back to the recipient’s bank.
Previously, African businesses and their local banks relied on correspondent banks, often located outside of Africa, to settle payments between two African currencies using a third, external currency, such as dollars or euros. This approach imposed foreign exchange and liquidity constraints on individual African Central Banks.