New African Currency Marketplace to Boost Cross-Border Trade

A major trade initiative whose aim is to transform how business is done across Africa has unveiled a new platform, thought to simplify currency transactions, led by the continent's leading pan-African payments provider. The African Currency Market Platform, managed by 15 central banks under a new system called the Pan-African Payments and Settlement System (PAPSS) is planned to be launched in the next few months.

The company's boss says that enabling commerce through international collaboration could uplift the population, headquartered by Mike Ogbalu, the CEO.

Ogbalu told Reuters in an interview from Cairo how the platform will work.

“We will have rates market-driven and our system can be able to match the rates that are being offered by different participants in our ecosystem,” he stated. Open to 150 commercial banks already, PAPSS is designed to solve chronic ills within Africa's foreign exchange markets where liquidity is rare and volumes are tightly piled in the hands of a few banks such as state-owned SABIC in countries like South Africa and Nigeria.

For those businesses beyond that region, they must currently acquire U.S. dollars in order to obtain African currencies; to make a global sale.

African Currency Market Platform has a vision of allowing direct local currency exchanges A situation where Ethiopian airline selling tickets in naira when they try to transact with a Nigerian firm that needs to buy from Ethiopia and can do so without trading in revenue from birr is one example that Ogbalu gave. Our system will automatically pair them and then party A in naira to Nigeria, party B to Ethiopia B for birr “No third-party currency is needed at all for the transaction to complete,” he told me. The idea has the potential to remove the dollar middleman, making continental trade significantly smoother.

Many countries on the continent have been in the process of transitioning their exchange regimes to more market-based ones, others like Nigeria, Egypt, and Ethiopia. But problems remain. In countries like South Sudan or the Central African Republic where economic instability and conflict lead to dollar shortages, companies wrestling to repatriate profits. Due to currency fluctuations, these firms are usually left with a financial writedown or invest in local assets such as real estate in order to protect their earnings.

Other than this, alternative solutions like cryptocurrencies (i.e. Bitcoin) turned out to be a panacea but so far found adoption on a limited scale.

In the case of, say, Kenya but with weak legal frameworks want to make it available globally and beyond. Given this context, the African Currency Market Platform may indeed be an actionable solution. Ogbalu said it would be “game-changing” for business but declined to speculate on reported trading volumes or the size of the market.

A new platform from PAPSS unblocks the potential of African trade indirectly achieved by spawning more direct, transactional, and market-oriented currency swaps. It solves a primary pain point: how to send money somewhere and not depend on financially arid hard currency destinations. The continent is finding itself bound more and more economically, this initiative could make commerce smoother creating a harmonious ecosystem where companies can prosper; what was once common in Big Nations enclaves now goes beyond formalized payment systems on the continent. The upcoming debut of the African Currency Market Platform means an audacious stride towards a more interconnected and prosperous Africa.