Ghana and Nigeria have made steady progress with the integration of payment systems, as part of the implementation of an integrated payment system for West African states.
In an interview following a training session for financial journalists, Mr. Archie Hesse, Chief Executive Officer of Ghana Interbank Payment and Settlement Systems (GhIPSS), revealed that the technical level of integration has been completed, and currently what remains is to synchronise the settlement of currency exchanges during transactions.
“We are transacting in cedis, Nigeria transacts in naira. What do we do? Are we going to have a daily exchange rate between the two countries’ currencies? This is a key factor [currency settlement] to be looked at,” he said.
According to Ghana’s National Payment Systems Strategic Plan (2019-2024), the final integration of West African states’ payment systems will be implemented by the end of 2022.
GhIPSS is expected to introduce a scheme to link the National Switching and Processing System—gh-LinkTM—with other West African countries.
Mr. Hesse noted that Afreximbank, the pan-African trade finance lender, has initiated a project to address the forex implications of cross-border payment transactions in Africa.
Late last year, the bank in collaboration with the African Union and some African central banks launched a Pan-African Payment and Settlement System (PAPSS), which is a central financial market infrastructure to support payment arrangements between African states to facilitate the economic and financial integration of Africa.
“Once it is done, with the switches all linked to each other, it should be easy to integrate,” Mr. Hesse said.
PAPSS expects to connect the entire continent, handle instant payments in multiple African currencies, and provide a settlement mechanism that creates trust within the ecosystem.
According to its sponsors, PAPSS brings two critical changes to Africa’s trade finance: minimising the use of hard currencies in trade payments, and domesticating payments and settlements within Africa. This, in turn, will help organisations and their financiers manage currency risks better.