INTRODUCING | PAPSS to Launch African Currency Marketplace, an FX Market for African Currencies Without 3rd-Parties, in 2025

The Pan-African Payments and Settlement System (PAPSS) is set to introduce an African currency marketplace later in 2025, its CEO revealed in a recent interview.

Supported by 15 central banks and already connected with 150 commercial banks, PAPSS seeks to tackle persistent liquidity and currency exchange issues by facilitating direct trading of local currencies, as stated by its CEO, Mike Ogbalu.

“The rates will be determined by the market, and our system will match based on the rates provided by the various participants in our ecosystem,” he explained.

The initiative aims to strengthen financial integration and promote trade by removing the reliance on third-party currencies, like the U.S. dollar, for intra-African transactions.

Africa’s foreign exchange markets have historically struggled with low liquidity, with most trading occurring in South Africa and Nigeria. For businesses and individuals looking to exchange other African currencies, the process usually involves converting to dollars first, which is both expensive and inefficient.

The Africa Currency Marketplace seeks to simplify this process. According to Ogbalu, an Ethiopian airline selling tickets in Nigerian Naira, for example, could directly exchange its revenue with a Nigerian company operating in Ethiopia, using Ethiopian birr.

“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,” he said.

Swaps have previously been undertaken and discussed in Africa:

• The Central Banks of Ethiopia and Nigeria undertook a swap of $100 million (2023) – The swap involved utilizing the revenues of Ethiopian Airlines from Nigeria and the earnings of Dangote Cement in Ethiopia. This arrangement addressed the challenges faced by both companies in repatriating their profits due to the foreign exchange shortages prevalent in both countries.

• Ethiopia and China formalized a currency swap agreement, enabling trade between the Ethiopian Birr and the Chinese Yuan (2024) – This significant move, announced by Finance Minister Ahmed Shide, aims to enhance trade flexibility, attract foreign direct investment (FDI), alleviate foreign exchange shortages, and strengthen economic ties between the two nations.

The initiative comes at a time of wider currency reforms across Africa, with countries such as Nigeria, Egypt, and Ethiopia moving towards more market-driven exchange systems. However, challenges remain, especially in markets like South Sudan and the Central African Republic, where violence or economic instability frequently leads to dollar shortages.

Companies operating in these regions often face difficulties repatriating revenue, resulting in annual write-offs to adjust for currency fluctuations or investing in assets like real estate to safeguard value.

Ogbalu referred to the platform as ‘transformational,’ highlighting its potential to create new opportunities for businesses facing challenges due to currency volatility and repatriation issues.

PAPSS, created by the African Export-Import Bank (Afreximbank), in partnership with the African Union Commission (AUC) and the African Continental Free Trade Area (AfCFTA) Secretariat, has already made significant progress in facilitating intra-African trade since its launch in 2022. The system aims to reduce the continent’s dependence on offshore payment channels, which currently handle more than 80% of cross-border transactions, costing businesses around $5 billion annually in fees.

Recent milestones highlight PAPSS’s expanding presence. In February 2025, KCB Group in Kenya, the largest bank in East Africa, became the first financial institution in Kenya and the region to begin transactions on the scheme.

So far, 115 commercial banks, including:

• Standard Bank
• 4 of Africa’s largest banks
• 13 central banks, and
• 10 switching-service providers

have joined the system

The Central Bank of Egypt also joined the system in December 2024 signaling Egypt’s dedication to strengthening economic relations with Africa. These integrations support PAPSS’s objective of increasing intra-African trade, which currently represents only 16% of the continent’s total trade volume.

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