The Pan-African Payments and Settlement System (PAPSS) is set to launch a pioneering African currency market platform aimed at enhancing cross-border trade by enabling direct currency exchanges between African nations.
The initiative seeks to reduce reliance on third-party currencies such as the U.S. dollar and bolster regional trade efficiency.
PAPSS, backed by 15 central banks across Africa, plans to roll out the Africa Currency Marketplace later this year to complement its existing payments infrastructure, which is already integrated with 150 commercial banks.
The new platform is designed to improve liquidity in Africa’s foreign exchange markets, which have long been fragmented and shallow, with trade dominated by South Africa and Nigeria.
“The rates will be market-driven, and our system is able to match participants based on the rates they offer within our ecosystem,” said Mike Ogbalu, CEO of PAPSS, in an interview.
Africa’s forex markets often face liquidity constraints, forcing businesses to first acquire dollars before converting them into other African currencies. The new platform aims to eliminate this inefficiency by allowing direct exchanges between local currencies.
For example, under the new system, an Ethiopian airline selling naira-denominated tickets in Nigeria could exchange its naira revenue directly with a Nigerian company trading in Ethiopia using the Ethiopian birr. PAPSS will intelligently match these transactions, ensuring seamless trade without the need for an intermediary currency.
“This system ensures that Party A receives naira in Nigeria while Party B gets birr in Ethiopia, completing the transaction without external currency involvement,” Ogbalu explained.
Many African businesses struggle to repatriate revenue due to dollar shortages triggered by economic instability or conflicts in countries such as South Sudan and the Central African Republic.
Companies operating in volatile currency markets often face significant financial losses due to currency revaluations or resort to investing in real estate and other assets to protect their funds.
Some businesses have turned to cryptocurrencies like Bitcoin as an alternative, but adoption remains limited due to the lack of legal frameworks in key markets such as Kenya. The Africa Currency Marketplace is expected to provide a more stable and structured solution for businesses and financial institutions seeking to manage currency risks.
“This platform will unlock significant opportunities for African businesses, ensuring that cross-border trade becomes more efficient, cost-effective, and resilient to currency fluctuations,” Ogbalu said, describing the initiative as “transformational.”
While specific projections on trading volume and market size were not disclosed, industry experts anticipate that the platform will strengthen intra-African trade and support economic integration under the African Continental Free Trade Area (AfCFTA) framework.
The PAPSS initiative represents a major step toward reducing Africa’s dependency on external currencies, fostering economic stability, and improving trade flows across the continent. With the Africa Currency Marketplace, businesses will have a reliable and efficient alternative to navigate the complexities of currency exchanges within the region.
