International trade within Africa is experiencing a shift as tariff disputes escalate among countries, promoting self-reliance and reduced dependence on foreign markets.
In the heart of 2025, the Pan-African Payments and Settlements System (PAPSS) has made significant strides in reducing trade costs and lessening African nations' reliance on the U.S. dollar. Launched in 2022, PAPSS now operates in 17 countries, including Morocco, and is transforming the financial landscape of the continent.
Tariff wars have taken a toll on Africa, with 20 countries, including Egypt, Ethiopia, and Kenya, facing elevated tariffs from the Trump administration, ranging from 11% to 50%. Another 29 African countries are subject to a baseline tariff of 10%. Amid these challenges, PAPSS offers a beacon of hope.
PAPSS facilitates real-time cross-border payments and integrates numerous national financial switches and banks, thereby enabling smoother intra-African trade settlements without the need for hard foreign currencies like the dollar. This eliminates the "hard and costly currency bottleneck" that previously cost the continent around $5 billion annually in fees, delays, and lost opportunities.
One of PAPSS's most notable advancements is the African Currency Marketplace (PACM), a platform launched in collaboration with the African deep-tech firm Interstellar. PACM is a transparent and order book-driven platform that allows businesses and financial institutions to directly exchange local African currencies under trusted regulations and global standards.
PACM creates a continent-wide liquidity pool that supports and deepens intra-African trade by allowing sovereign currency exchange without dollar intermediation. This diminishes exposure to dollar volatility and mitigates currency inconvertibility challenges posed by Africa’s fragmented financial landscape of 41 currencies.
Morocco’s recent accession as the 17th PAPSS member country further expands the system’s reach, strengthening Africa’s financial integration. These developments contribute strategically to facilitating the African Continental Free Trade Area (AfCFTA) objectives and reducing trade friction caused by tariff disputes and currency volatility.
In summary, PAPSS is actively reducing intra-African trade costs by eliminating reliance on external hard currencies and creating a robust ecosystem for direct currency settlement. This infrastructure is a critical step toward economic sovereignty and enhanced trade competitiveness on the continent.
Sources:
- Afreximbank press release on PAPSS African Currency Marketplace – July 2025 [1][2]
- Morocco joining PAPSS, expanding membership and financial integration – July 2025 [3]
- Afreximbank Annual Meeting, highlighting PAPSS progress and regional support – June 2025 [4]
- The African Continental Free Trade Area, once fully operational by 2030, would be the world's largest free trade area by land area.
- PAPSS aims to reduce trade costs and minimize exposure to dollar volatility amid ongoing trade wars.
- Using local currencies such as the Nigerian naira, Ghanaian cedi, or South African rand through PAPSS could reduce transaction fees from 10%-30% to 1%.
- The Pan-African Payments and Settlements System (PAPSS) enables intra-African businesses to conduct cross-border transactions in local currencies.
- To meet these settlement times, participants in PAPSS are required to agree to a pre-funding arrangement, maintaining balances with PAPSS.
- PAPSS payments are completed in near real time, typically processing within 120 seconds.
- PAPSS is currently operational in 15 African countries, including Kenya, Malawi, Tunisia, and Zambia.
- PAPSS does not address tariff issues in Africa.
- The African Continental Free Trade Area encompasses a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion.
- PAPSS was developed by Afreximbank as a component towards the African Continental Free Trade Area.
- PAPSS launched commercially in January 2022.
With the continuous expansion of the Pan-African Payments and Settlements System (PAPSS), businesses in finance can now engage in smoother intra-African trade transactions, as the system enables real-time cross-border payments and integration of numerous national banks without the need for hard foreign currencies like the dollar. This PAPSS initiative, in association with the African Currency Marketplace (PACM), offers a strategic solution to reduce trade costs and lessen African nations' reliance on the U.S. dollar, particularly amid elevated tariffs from external trade wars.
