KCB and Bank of Kigali launch a seamless cross-border payment system to boost trade and financial integration across Africa.
Driving Seamless Trade in Africa
Kenya Commercial Bank (KCB) and the Bank of Kigali have taken a significant step towards streamlining intra-African trade by introducing a new cross-border payment system, the Pan-African Payment and Settlement System (PAPSS). The initiative is designed to eliminate transactional bottlenecks, allowing businesses and individuals to transfer funds efficiently across African markets. The move aligns with the objectives of the African Continental Free Trade Area (AfCFTA), which seeks to enhance trade facilitation and economic integration on the continent.
Mike Ogbalu III, CEO of PAPSS, said, “The customers will experience faster, more cost-effective, and secure cross-border transactions from the comfort of their banks’ mobile applications or through their branches. Businesses can trade more freely and competitively by eliminating the need for correspondent banks outside the continent and removing dependencies on third-party currencies. This transformation is set to unlock new opportunities for trade and investment, allowing African SMEs to access broader markets and contribute to local economies.”
“With only 16 per cent of Africa’s total trade occurring intra-regionally, the launch of PAPSS in Kenya and Rwanda is a significant step in unlocking the continent’s potential,” continued Mr. Ogbalu III. “We believe that this innovative financial market infrastructure will facilitate greater trade opportunities, economic growth, and financial empowerment between the Eastern African countries and the rest of Africa.”
Addressing Payment Barriers
One of the primary obstacles to intra-African trade has been the lack of efficient payment infrastructure. Cross-border transactions in Africa often involve delays, high transaction costs, and reliance on foreign intermediaries. The new payment system launched by KCB and the Bank of Kigali seeks to address these inefficiencies by providing a direct, cost-effective, and real-time transaction mechanism. The system will enhance financial connectivity between East African economies and beyond, making it easier for businesses to conduct cross-border trade.
A Boost for SMEs and Regional Trade
Small and medium-sized enterprises (SMEs), which form the backbone of Africa’s economy, stand to benefit significantly from this initiative. By reducing transaction costs and processing times, the system will empower SMEs to expand their trade networks without financial constraints. Additionally, the increased financial integration among banks in different African countries will foster greater economic collaboration and investment opportunities.
Speaking on the milestone, KCB Group CEO, Paul Russo, said, “We want to play a bigger role in catalyzing trade and payments in Africa and beyond, leveraging our digital capabilities and regional footprint. Our entry into PAPSS aligns perfectly with our strategy of supporting economic growth in Kenya and across Africa by facilitating seamless financial transactions.”
Dr. Diane Karusisi, CEO of Bank of Kigali, highlighted the significance of the partnership: “This system allows people to send money quickly. For example, if someone sends Rwandan francs from Rwanda, it can reach Ghana in their local currency. The system converts the currency to meet the local requirements. Entrepreneurs in Rwanda can now receive payments instantly in Rwandan francs or USD from any member country. This service is fast, affordable, and reliable.”
Supporting AfCFTA’s Vision
The AfCFTA aims to create a unified market by reducing trade barriers and facilitating smooth transactions across borders. Efficient payment solutions are crucial for the success of this agreement, as they enable businesses to trade without facing currency conversion challenges or delays in fund transfers. The collaboration between KCB and the Bank of Kigali represents a step forward in building the necessary financial infrastructure to support Africa’s growing trade ambitions.
With the introduction of this seamless payment system, KCB and the Bank of Kigali are paving the way for a more integrated African trade environment. By eliminating transactional inefficiencies, the system will not only support businesses and SMEs but also contribute to the broader economic development of the continent. As Africa continues to push for stronger trade ties, innovative financial solutions like this will play a critical role in shaping the future of commerce across the region.
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