By Felix Khanoba
The Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat, Wamkele Mene, says the full implementation of Pan-African Payments and Settlement System (PAPSS) is estimated to reduce cost of intra-Africa trade transactions by $50 billion annually.
Wamkele, who made this known in a chat with newsmen in Abuja on Tuesday, said the centralised payment and settlement platform is being developed in collaboration with the African Export-Import Bank (Afreximbank), adding that a pilot phase has already commenced in six countries.
His words: “We have started the pilot phase of the Pan-African Payment and Settlement platform for six countries in West Africa, who have switched unto the platform and transactions are already happening within the six countries that are at an advanced stage of the pilot project.
“Africa has 42 currencies and the cost of currency convertibility actually is a constraint to intra-Africa trade, it make us inefficient, it makes our trade unnecessary expensive, it adds to the cost of doing business if you are a small medium enterprise, so the payment and settlement platform will really make a significant contribution.
“Our estimate is that it will reduce the cost of transactions by 5 billion dollars annually, that is the aggregate amount that is spent on currencies convertibility.”
On the slow pace of the continental trade pact, the South African-born Wamkele likened the AfCFTA process to a marathon rather than sprint, saying it took the European Union several decades to have their present common market, adding that 38 countries have ratified its instruments.
He said : “38 countries have now ratified the agreement establishing the AfCFTA, we are still waiting for others to ratify but I’m not worried because we are at 38, because ratifying an international instrument, the domestic process has to be followed, the legal process must be followed, the political process must be followed, so that a particular country can be in a state of readiness to ratify it.
“There are countries that are ready with the Customs infrastructure that is required and to be able to trade – South Africa, Egypt, Kenya, Ghana. These are the countries that have introduced the necessary Customs procedures for the trade to start happening.
“Overall, we are in the initial stage of implementation, we are also negotiating outstanding areas of phase one, you will remember that phase one is in trade in goods and trade in services. Phase two, which we will start soon around July, August is intellectual property rights, competition policy, women in trade, digital trade-these are the new generation trade issues, that will be areas we will focus on.
“The ambition is that by 50 years from now, 97per cent of products traded in Africa should be a zero duty and that is very ambitious policy that we want to make sure we boost intra-Africa trade by reducing these barriers to trade.
“Africans should be patient and understand that we are in the initial stage of a significant endeavour and that is to bring together what is now 38 countries to trade under a single set of rules is not an easy thing.
“You need to know from the experience of the European Union that it has taken the European Union 72 years to get to this point of market integration they enjoyed today.”