ABA Editorial Board · Jan 28, 2026 · 10 min read
The Pan-African Payment and Settlement System reached 17 countries and over 150 banks by late 2025. It launched a card scheme, a currency marketplace, and an ambitious goal of saving African economies USD 5 billion in forex costs. Our view is that PAPSS will probably fail at that specific stated goal, and that the failure will not matter because PAPSS will have succeeded at something more important along the way.
By late 2025, the Pan-African Payment and Settlement System had grown into what its advocates describe as Africa's continental payment sovereignty infrastructure. Seventeen countries had joined. More than 150 commercial banks were integrated. Morocco became the seventeenth member on 7 July 2025. The PAPSSCARD scheme was launched on 27 June 2025. The Pan-African Currency Marketplace followed on 7 July 2025. The system's backers at Afreximbank have publicly forecast that PAPSS could save African economies approximately USD 5 billion annually in foreign exchange conversion costs by replacing correspondent banking with direct local-currency settlement. These numbers are repeated across African trade ministry press releases, Afreximbank annual reports, and continental media coverage. Our view is that the specific USD 5 billion forex savings target is probably not going to be reached within the stated horizon, and the failure to reach it will not matter, because PAPSS will have succeeded at something more important that the headline number obscures.
The PAPSS forex savings figure rests on assumptions that practitioners working inside African cross-border payment infrastructure have been quietly skeptical of. The headline calculation assumes that a meaningful share of intra-African trade, currently routed through correspondent banks in London, New York, and Frankfurt, will migrate to direct PAPSS settlement. The migration requires two things to happen simultaneously: African commercial banks need to actively promote PAPSS to their corporate customers, and those corporate customers need to prefer PAPSS over their existing correspondent banking relationships. Neither of these conditions is automatic.
Banks earn meaningful revenue from correspondent banking fees. A commercial bank moving a Nigerian corporate's payment to a Ghanaian supplier through a Euro-denominated correspondent chain earns foreign exchange spreads, wire transfer fees, and intermediation margins at multiple points in the chain. The same transaction routed through PAPSS produces a fraction of that revenue for the originating bank. The economic incentive for banks to actively migrate corporate flows away from correspondent banking is weak, and the incentive to passively keep existing flows on legacy rails is strong. Practitioners in African trade finance have been consistent on this point for two years: PAPSS works technically, but its commercial adoption depends on convincing banks to reduce their own revenue to deliver the continental savings.
On the corporate customer side, the migration is also slower than the headline suggests. A finance director at a Nigerian importer has spent years building relationships with correspondent banks, knows how to structure letters of credit through them, and has procedures written around their operational quirks. Switching those procedures to PAPSS is operationally expensive in the short term even if it saves money in the long term. The kind of corporate treasury team that will embrace PAPSS quickly is the one that has been actively burned by correspondent banking in a recent currency crisis. The kind that will drag its feet is the one for which correspondent banking still basically works.
The more interesting outcome, and the one we think PAPSS will actually achieve within the next three years, is the creation of a credible institutional alternative to correspondent banking that can be used when other routes fail. This is a much narrower claim than "saving USD 5 billion a year" but it is also a much more durable one. Every time a West African currency goes through a crisis, every time a Nigerian bank runs out of dollars, every time an Angolan importer cannot find a correspondent to take a trade finance facility, PAPSS becomes the rail of last resort. Over time, "rail of last resort" is how infrastructure becomes standard infrastructure. The SWIFT network itself became standard not because everyone liked it from day one but because it was the only thing that reliably worked during the foreign exchange crises of the 1970s.
Senior trade finance practitioners we have heard from make a similar point. PAPSS does not need to capture the majority of intra-African trade flows in the short term to be economically significant. It needs to capture the marginal flows that correspondent banking cannot handle, and it needs to be there reliably when currency stress hits. Both of those goals are achievable within the next three years even without aggressive bank-by-bank adoption. The forex savings will accumulate slowly. The optionality that PAPSS creates, for African regulators, for African banks, and for African corporates, is more valuable than the specific savings number on the headline slide.
Instead of the USD 5 billion forex savings target, we suggest three metrics that would better capture whether PAPSS is succeeding. First, the number of African corporate treasury teams that have at least one PAPSS-integrated bank relationship as a backup to their primary correspondent banking setup. This measures optionality. Second, the share of PAPSS transaction volume that comes from countries experiencing active foreign exchange stress in any given quarter. This measures relevance to the problem PAPSS is actually solving. Third, the diversity of corridors supported, because a PAPSS that handles ten different African currency pairs is substantially more useful than one that handles two high-volume pairs.
These metrics will probably not produce the celebratory press releases that USD 5 billion targets enable. They will produce a more honest picture of whether the infrastructure is actually earning its place in African trade finance. The people running PAPSS at Afreximbank are skilled operators, and the people promoting the headline targets are probably doing so because institutional storytelling requires them to. If PAPSS were evaluated against the correct metrics, we think it would be seen as quietly succeeding in exactly the way successful infrastructure always does, which is to say slowly, unevenly, and in ways that only become visible after the fact.