Kenya is leading the charge among African nations to lessen their dependency on the US dollar after winning the competition to host an electronic platform that would allow traders to settle agreements in their own national currencies.
On Tuesday, President William Ruto declared that Kenya will serve as the home country for the Pan-African Payment and Settlement System (Papss).
The President informed a crowd in Nairobi that the payment platform will be approved by the Assembly of Heads of State and Government of the African Union in February of next year.
It is estimated that the platform will help the continent save over Ksh.750 billion ($5 billion) in exchange fees that traders would have otherwise paid to convert their individual national currencies into a third currency, namely the US dollar. These numbers come from approximations made by Accra-based African Continental Free Trade Area (AfCFTA) secretariat.
“Kenya is a champion and we have been asked to host the headquarters of the pan-African payment system in Kenya,” said President Ruto during the launch of AfCFTA’s Trade and Development Centre at Strathmore University.
African Export-Import Bank (Afreximbank) established the Papss platform, which is supported by AU and allows a merchant in a participating nation to direct their local bank to pay a supplier in another country using their local currency.
An estimated 80% of trade agreements inside Africa are finalized in the US and Europe due to the absence of an integrated payment and settlement infrastructure.
Due to investors fleeing to safe havens due to high interest rates and global inflation, traders on the continent have been negatively impacted by a lack of US currency since last year.