The Pan-African Payments and Settlement System (PAPSS), a crucial pan-African payments infrastructure, is set to launch an African currency marketplace later this year. This innovative initiative aims to significantly enhance cross-border trade and deepen financial integration across the continent. Backed by 15 central banks and currently integrated with 150 commercial banks, PAPSS is strategically positioned to tackle persistent liquidity and currency exchange challenges that have long hindered intra-African commerce.

According to its CEO, Mike Ogbalu, the marketplace will enable direct trading of local African currencies, eliminating the costly and inefficient need for third-party currencies like the U.S. dollar in transactions between African nations. Ogbalu explained that the new platform will complement PAPSS’s existing payment infrastructure, facilitating market-driven rates. “The rates will be market-driven, and our system is able to do a matching based on the rates offered by the different participants in our ecosystem,” he stated, emphasizing the intelligence of the system in matching currency exchanges.

Africa’s foreign exchange markets have historically suffered from shallow liquidity, with a disproportionate concentration of trading activities in countries such as South Africa and Nigeria. Businesses and individuals seeking to exchange less frequently traded African currencies often face the hurdle of first converting their funds into U.S. dollars, a process that adds significant cost and inefficiency. The Africa Currency Marketplace is designed to streamline this complex procedure. Ogbalu provided a practical illustration: an Ethiopian airline selling tickets in Nigerian naira could directly exchange its earnings with a Nigerian company trading in Ethiopia using Ethiopian birr. He elaborated, “Our system will intelligently match them, and then party A will get naira in Nigeria and party B will get birr in Ethiopia. The transaction just completes without any third-party currency being involved at all.”

This initiative aligns with broader currency reforms currently underway in Africa, with several nations like Nigeria, Egypt, and Ethiopia transitioning towards more market-based exchange regimes. However, significant challenges persist in some regions. Markets such as South Sudan and the Central African Republic frequently experience dollar shortages due to violence or economic instability. Companies operating in these areas often struggle to repatriate revenue, leading to annual write-downs for currency revaluations or forcing investments in physical assets like real estate to preserve value. While some entities have explored cryptocurrencies such as Bitcoin as a workaround, their adoption remains limited due to inadequate legal frameworks in many countries, including Kenya.

Ogbalu described the upcoming platform as