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Kenya targets hosting Africa payment platform in push against US dollar
Central Bank of Kenya Governor Dr Kamau Thugge (centre), Equity Group Managing Director and CEO Dr James Mwangi and Equity Group Chief Economist Yvonne Mhango during Equity Bank official opening of 2023 Kenya-DRC Investors’ roadshow at the bank's Upper Hill headquarters in Nairobi on July 17, 2023. PHOTO | LUCY WANJIRU | NMG
Kenya has announced plans to vie for hosting rights for a common clearing house to pay and settle cross-border trade deals in an ambitious push aimed at cutting reliance on US dollars to close intra-Africa deals.
Central Bank of Kenya Governor Kamau Thugge said on Monday, Nairobi will “express our interest in hosting” the pan-African payment and settlement system (Papss), which aims at facilitating intra-African payments in national currencies.
The system, developed by Afreximbank, was adopted by Addis Ababa-based African Union in July 2019 and has been backed by the Accra-headquartered African Continental Free Trade Area (AfCFTA) Secretariat.
“We will soon be writing to Afreximbank to express that desire [to host Papss],” Dr Thugge told participants of the Kenya-DRC 2023 Investors’ Roadshow organised by Equity Holdings Group.
“I think as we move towards African Continental Free Trade Area (AfCFTA), we should position Kenya and Nairobi as a financial hub in this particular region.” Afreximbank officially launched the system in January 2022 following a trial phase on six central banks in West African Monetary Zone (Wamz) from October 2021.
Wamz countries — Nigeria, Ghana, Liberia, Guinea, Sierra Leone and The Gambia — have been joined by Zambia, Zimbabwe and Djibouti on the Papss platform.
The system enables a trader in participating country to instruct her local bank to pay a supplier in a different country using the local currency.
Her bank then sends instructions to Papss to settle the payment through the local bank of the supplier in the currency of their jurisdiction in real-time.
Rallying peers
Papss is tasked with doing validation checks before passing the instruction to the recipient bank.
The CBK’s announcement comes barely a month after President William Ruto rallied his peers on the continent in mobilising respective central banks, commercial banks, payment service providers, card schemes and other payment intermediaries to tap into Papss.
