The secretary general of the African Continental Free Trade Area (AfCFTA), Wamkele Mene, has said with the establishment of the Pan-African Payment and Settlement System (PAPSS), Africans will be able to trade in local currency without having to face the challenges of the cost of currency convertibility.
Currency convertibility is the degree to which a country’s domestic money can be converted into another currency or gold.
Mene said, “We estimate the cost of currency convertibility to be up to US$5 billion annually.”
“In 2019, the African continent transacted close to US$20 billion in global payment platforms which is not in the best interest of Africa’s economy,” he added.
He said the introduction of PAPSS with Afreximbank enables Africa to establish for itself an alternative payments system to support and boost intra-Africa trade particularly intra-regional trade that is led by small-medium enterprises and young entrepreneurs.
The secretary general of AfCFTA was speaking at the Africa Prosperity Dialogues at the Peduase Presidential Lodge on Saturday (28 January).
Dubbed the Kwahu Summit 2023, the first of the annual dialogues, brought together Africa’s political and business leaders to discuss intra-Africa trade, with a focus on the Africa Continental Free Trade Area (AfCFTA).
The series, an initiative of the Africa Prosperity Network (APN), was on the theme: “AfCFTA: From Ambition to Action, Delivering Prosperity through Continental Trade”.
The summit deliberated towards building a strong and effective single market of Africa’s 1.3 billion people to help create more opportunities for its citizens and build a more prosperous Africa.
Highlighting the success of the AfCFTA, Mene said, “We have successfully established a new regime for trade in Africa … We now have all of the legal documents that are required for commercial and meaningful trade to happen”.
“We have an electronic tariff book; we have the rules of origin manual which enables our traders and economic operators to determine with certainty the harmonised rules that applied to them as they seek to trade with the continent.”
Despite these successes, the secretary general of AfCFTA said, “One of the biggest challenges that our continent faces is the cost of trade, affordability of trade and access to trade, particularly for small and medium enterprises and young entrepreneurs.
“It is our intention that with the introduction of the PAPSS, a trader or even a young entrepreneur on any part of our continent, going forward will be able to trade in local currency without having to face the challenges of the cost of currency convertibility“.
Digital trade
Mene said the AfCFTA Secretariat is on course to conclude a protocol on digital trade.
He said the protocol shall establish a regulatory framework for the digitisation of Africa’s economy.
“We shall conclude the protocol on digital trade. A very important aspect of Africa’s economy is the digitisation of trade.”
“The protocol shall establish a regulatory framework for the digitisation of Africa’s economy. It shall set out market access.”
He added, “It shall also include payments as well as issues related to data transfer and data movements across jurisdictions in Africa”.
