Payment Cross-Frontiers in Africa Remains a Major Challenge

Despite the announcement by the Afreximbank of its new cross-border payment system, PAPSS, last month (see September’s Newsletter), the hurdles that an online shop has to overcome to ensure payment are very significant. PAPSS of course is only just starting in the ECOWAS region. Smart Africa has also been looking at the issue and EFA attend a 2-day session in October. The issues mainly involve national regulations from Central Banks on the remittances of payments – which can affect both the buyer purchasing a product in another currency (eg US$) as well as the seller receiving payment in another currency – customs, and tax authorities. The untangling of these multifarious national regulations will be key to the success of the AfCFTA, and yet the AfCFTA negotiations do not necessarily cover such regulations. The AfCFTA proposed Protocol on Ecommerce, which EFA understands will now be renamed the Digital Trade Protocol, should identify these non-tariff barriers to trade, but can it cut this Gordian knot? Smart Africa has identified 5 action points for next year to assist in the process.