June 2025

Amid growing global market volatility and increasing geopolitical fragmentation, African countries are moving from declarations to institutional implementation of dedollarisation. At the center of this transition is the Pan-African Payment and Settlement System (PAPSS), which enables cross-border payments in national currencies without relying on foreign correspondent banks.

Launched in January 2022 with the support of the African Union and the African Export–Import Bank (Afreximbank), PAPSS has, by mid-2025, been integrated with the central banks of 15 countries and more than 150 commercial banks. It represents Africa’s first fully operational attempt to build sovereign payment infrastructure.

Lowering Costs and Currency Risks

Before PAPSS, around 80% of intra-African trade payments were routed through the US dollar, often resulting in high transaction costs of 10–30%. With PAPSS, cross-border transaction fees have dropped to 1%, potentially saving African economies more than USD 5 billion annually.

The system enables settlements in participating national currencies, with conversion handled internally through central banks and settlement agents — simplifying operations and reducing exposure to volatile currency pairs.

Geopolitical Context and US Reaction

Interest in PAPSS intensified after comments by several US political figures, including former President Donald Trump, suggesting possible restrictions on countries reducing their reliance on the dollar.

Although no formal sanctions were imposed, many African governments saw this as a signal to strengthen financial sovereignty.

Officially, PAPSS is positioned as a tool to facilitate and reduce the cost of intra-regional trade — not as a dedollarisation mechanism. Yet its practical effect aligns with global trends in BRICS and Southeast Asia toward diminishing the dollar’s dominance in international settlements.

Support from International Institutions

The World Bank and the International Finance Corporation (IFC) are expanding local-currency lending programmes to reduce FX risks and reinforce financial resilience.

Within the G20, discussions have begun on recognising PAPSS as a regional node of the global payments ecosystem.

PAPSS already processes transactions in over ten currencies, including the Nigerian naira, CFA franc, Kenyan shilling, and Ghanaian cedi. Upcoming developments include onboarding the South African rand and linking PAPSS to national digital ID frameworks to streamline transaction verification.

Implications for External Partners

For Russia, China, Türkiye, and the Gulf countries, PAPSS opens alternative settlement channels — including in rubles and yuan — bypassing the dollar and SWIFT.

In the long term, technical integration between PAPSS, Russia’s SPFS, and China’s CIPS could underpin a broader Eurasian–African settlement architecture.

However, these opportunities require:

• close coordination with African central banks,

• regulatory harmonisation,

• mechanisms for mutual recognition of settlement centers.

Participation in alternative payment systems may also provoke political countermeasures from Western countries, given today’s increasingly politicised financial environment.

Conclusion

PAPSS marks an important step toward a financially sovereign Africa, capable of operating internal payment channels without reliance on external intermediaries.

In a world with constrained access to dominant clearing systems and the rising influence of Global South economies, such platforms are becoming essential not only for regional integration but also as foundational nodes of a new global financial architecture.

Information Department, RABC