Nigeria and other African countries are to benefit from the $3 billion Africa Export Import Bank (Afreximbank) Pan-African Payment and Settlement System(PAPSS).
PAPSS is expected to boost intra-African trade by transforming and facilitating payment, clearing and settlement for cross-border trade across Africa.
President of Afrexim Bank, Mr. Benedict Oramah, stated this at a plenary session of the Nigeria International Economic Patrnership with the topic ‘’High Level Conversations on Scaling Up International Partnership for Nigeria on the Development Drive on the sidelines of the United Nations General Assembly (UNGA) 77 in New York, United States.
This was even as it disclosed that its loans to Nigeria stands at $7 billion in addition to $1 billion guarantees.
Oramah lamented that Africa with 42 currencies was bogged down by a fragmented payment system, saying it costs about $5 billion to make a transfer from one country to the other while it takes four days to two weeks for those transfers to be successful .
‘‘If you then add indirect cost, i may be two times the $5 billion earlier mentioned.”
He disclosed that the fragmented multi currency payment system diverts trade away from Africa because it makes our currency weak while also making every economy small because everything we do is fragmented.
‘‘Our stock exchanges don’t have liquidity while our airlines do not operate across Africa because the foreign currency to pay them is not there.
“So we decided to work with Africa Continental Free Trade Agreement (AfCFTA) and the Africa Union Commission and CBNs to put in place the pan African payment and settlement system which allows payment from West African trade in local currency,” he said.
He explained that what Afreximbank has done was to domesticate all African payments by supporting and backing the clearing and settlement with $3 billion.
‘‘What that will do for us is that it makes it possible for the Nollywood film producer to sell his product to a Zambian farmer. The Zambian farmer doesn’t need to start looking for Dollar or Euro. He just uses the Gambian currency to pay. But today, he cannot do that unless he has a credit card that is in foreign currency,’’.
On other interventions to Nigeria, he said the Bank has disbursed about $19 billion to Nigeria, out of which $13 billion was arranged in the last five years with $7 billion advanced in the last five years to Nigerian Banks.
He added that loan outstanding to Afreximbank by Nigerian Banks is about $2.5 billion, declaring that every Bank in Nigeria has a line of credit to Afreximbank.
‘‘We have to make sure that we control our own banking system. U.S., control its bank, Asia control its banks and Europeans control their banks. But it is only in Africa that others control African banks. That is why we remain producers of raw materials because the foreign owned banks only support those who come to the African continent to do the things that will support their own country.
All of the fertilizer plants that are standing up today were are as a result of the financing we gave. The oil industry in Nigeria. All the indigenous oil producers in Nigeria wouldn’t have had the capital to compete and some of those those assets from the IOCs without the support of Afreximbank.”