Introduction

At the 39th African Union Summit, held on February 14 and 15, 2026, in Addis Ababa, Ghanaian President John Dramani Mahama reiterated the need to accelerate the implementation of the Pan-African Payment & Settlement System (PAPSS). This speech comes at a time when African economic integration is increasingly becoming a central ambition for the continent. This is especially true given that, with the implementation of the African Continental Free Trade Area (AfCFTA), Africa aims to build the world’s largest integrated market in terms of the number of participating countries. But how do Africans pay each other?

Today, a significant portion of intra-African trade transactions passes through correspondent banks located in Europe or North America and are cleared in U.S. dollars or the Euro. When a company in Ghana sells goods to Kenya, the payment may go through a dollar bank in London or New York before returning to the continent. This results in substantial losses for Africa.

i. Let’s see how much this really costs Africa.

Africa has some of the highest cross-border payment costs in the world. Intra-African transfers can represent, on average, between 7% and 8% of the amount sent. For example, a company exporting $100,000 worth of goods can lose up to $8,000 in transaction fees and currency conversions alone. For a small or medium-sized enterprise (SME), 7% often represents the entire net profit margin. In other words, the cost of payment can wipe out the profit from trade. Across the continent, reliance on international payment networks costs Africa up to $5 billion annually in additional fees related to foreign exchange transactions. These are resources that could be used to fund infrastructure, support SMEs, or strengthen health and education systems.

While Africa seeks to boost its intra-continental trade, it currently represents only about 15% of the continent’s total trade, far behind Europe or Asia. Tariff barriers are gradually decreasing thanks to the AfCFTA, but financial barriers remain. When trading with a neighboring country becomes more expensive than trading with a partner outside the continent, it indicates a structural problem. It is precisely to address this gap that the Pan-African Payment and Settlement System (PAPSS) was launched, a mechanism enabling cross-border payments in local currencies without systematically using the dollar or the euro.

ii. How the PAPSS simplifies intra-African payments

In practical terms, the PAPSS allows a Cameroonian company to pay a Ghanaian supplier in CFA francs, while the supplier receives payment in cedis, thanks to a coordinated clearing system between African central banks. The dollar is no longer used as a mandatory intermediary currency. This technical change reduces bank fees, shortens settlement times, lessens exposure to currency volatility, and preserves liquidity within the African financial system. Some estimates indicate that the use of systems like the PAPSS could reduce transaction costs by 25% to 30% in participating countries. When these gains are applied to an African cross-border payments market estimated at over $300 billion annually, the potential savings become significant.

The PAPSS offers an African alternative that is faster, less expensive, and adapted to our economic realities. But for this to become a reality for all Africans—SMEs, workers, families—it must be put into practice.

iii. Consider indirect costs

Cross-border payments also entail indirect costs, namely payment delays, cash tied up, and uncertainties related to dollar fluctuations. In economies where access to credit remains limited, the speed of settlements can mean the difference between growth and bankruptcy. Dependence on foreign currencies also represents a macroeconomic risk. Each conversion into dollars increases the demand for foreign currency and puts pressure on foreign exchange reserves. It increases the continent’s vulnerability to external shocks, whether they be rises in US interest rates or geopolitical tensions. Therefore, failing to use an African payment system amounts to externalizing a portion of our monetary sovereignty.

iv. A rapidly expanding, but under-exploited African market

The African cross-border payments market is booming. Currently estimated at over $300 billion, it could reach nearly $1 trillion by 2035, according to some sector projections. If current structures persist, losses could increase with the growth of trade, as the cost of inaction grows alongside the economy itself. The PAPSS (Payment Access System for the African Community) has potential, but it has not yet been adopted by all commercial banks and economic operators. A lack of awareness of the system, institutional caution, regulatory delays, and inertia in banking practices are hindering its expansion. The system exists, but its use is lacking.

Conclusion

Each simplified transaction can encourage more regional trade, and each faster payment can allow an SME to reinvest immediately. Furthermore, reduced fees can boost the competitiveness of an African product. The PAPSS is a development infrastructure. The sooner the system is implemented, the sooner Africa can trade its countries simply, quickly, and profitably.

Authors

Haiwang Djamo, National Coordinator and Research Analyst, CEPI