Building on the momentum of the African Exchanges Linkage Project (AELP)’s 2022 launch, a groundbreaking partnership between the Pan African Payment and Settlement System (PAPSS) and the African Securities Exchanges Association (ASEA) promises to revolutionize cross-border transactions within African capital markets.
Prior to AELP’s debut, navigating stock market transactions across borders in Africa was a slow and costly process. Reliance on correspondent banks outside the continent and foreign currencies meant investors often faced hefty fees and lengthy settlement times. This inefficiency acted as a major barrier to cross-border investment, hindering the potential of Africa’s diverse stock exchanges.
Enter PAPSS, a game-changer developed by the African Export-Import Bank (Afreximbank) and the African Continental Free Trade Area (AfCFTA) Secretariat. This centralized financial market infrastructure enables instant and secure cross-border payments in local currencies across participating African nations.
Through a Memorandum of Understanding (MoU) signed in April 2023, ASEA, representing nine stock exchanges with a combined market capitalization exceeding $1.5 trillion, aims to leverage PAPSS’s capabilities to create a seamless payment experience for AELP users. This collaboration will streamline cross-border settlements for securities traded on these exchanges, significantly reducing transaction costs and boosting liquidity.
PAPSS CEO Mike Ogbalu III hailed the partnership as “a catalyst for unlocking the full potential of the AELP, paving the way for a truly integrated and thriving African capital market.” ASEA President and CEO of the Botswana Stock Exchange, Thapelo Tsheole, echoed this sentiment, stating that the collaboration would “remove critical barriers to cross-border investment, ultimately fueling economic growth and prosperity across the continent.”
With the PAPSS-ASEA partnership in place, the flow of investments across African borders is poised to accelerate. This collaboration marks a significant milestone in the continent’s quest for a more interconnected and dynamic financial landscape, and less reliant on non-African service providers.
Photo by PAPSS
