Kenyan companies will now be able to engage in trade with their counterparts in other African member states using local currencies, marking a pivotal advancement for the African Continental Free Trade Area (AfCFTA).
This after the Central Bank of Kenya (CBK) officially joined the Pan African Payments and Settlement System (PAPSS) in a significant move towards fostering economic integration.
Kenya joins other monetary authorities on the PAPSS platform who include 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.
“I am pleased to announce that the Central Bank of Kenya has signed the instruments that have finally seen Kenya join the Pan African Payments and Settlement System (PAPSS),” said trade CS Moses Kuria.
The journey of PAPSS began at the Twelfth Extraordinary Summit of the African Union in Niamey, Niger Republic, on July 7, 2019. Jointly launched by the African Union and the African Export-Import Bank (Afreximbank), PAPSS aimed to revolutionize cross-border transactions by facilitating seamless trade using local currencies.
“This means that Kenyan companies can trade with their peers from other African Member States using our local Currencies, a major boost for the African Continental Free Trade Area (AfCFTA),” Kuria said.
Transparent transactions
Over 40 commercial banks across the continent have joined the system, laying the groundwork for a new era of cross-border trade.
PAPSS has expanded its reach with individuals and businesses embracing the opportunities it offered.
No longer constrained by traditional payment hurdles, PAPSS can now engage in cheaper and more transparent transactions.
During his recent visit to Djibouti, President William Ruto emphasized the need to empower African economies by promoting trade in local currencies. He questioned the necessity of using US dollars for transactions between Djibouti and Kenya, for example.