I opened the Mo Ibrahim Foundation’s latest report for a slightly selfish reason: I had discovered that it cited an Emerging Markets Today article on the high cost of intra-African flights.
But once I started reading Africa on the Move: Boosting Mobility and Connectivity, the citation quickly became secondary.
The report gets at one of the biggest questions facing African economic integration today: what does a continental free trade area actually mean if people, goods and money still struggle to move across borders?
The African Continental Free Trade Area (AfCFTA) has always been ambitious. Full implementation could raise intra-African trade from around 18% to 53%, add roughly $1 trillion to manufacturing, generate hundreds of billions of dollars in additional income and create millions of jobs by 2035.
Those numbers explain why AfCFTA is so often described as transformative.
But the Mo Ibrahim Foundation report also makes clear that removing tariffs is only the beginning.
A single market needs infrastructure underneath it.
And in Africa, that infrastructure is still incomplete.
The problem is not only tariffs
AfCFTA has always been about more than tariff reductions. The African Union’s own implementation framework includes trade facilitation, infrastructure, finance and market integration alongside traditional trade policy.
That is important because a company trading between two African countries may still face considerable friction even when the underlying goods qualify for preferential treatment.
The buyer and seller may use different currencies. Their banks may not have a direct relationship. A payment may have to move through correspondent banks outside Africa, be converted into dollars or euros and then converted again before reaching the recipient.
Every extra layer adds cost, time and complexity.
This is one of the reasons financial infrastructure matters so much to the practical success of AfCFTA.
Why are cross-border payments still difficult in Africa?
Africa has 41 currencies. Many are not easily convertible into one another.
Traditionally, that has meant that a payment between two African countries can involve an international reserve currency even when neither side is actually trading with Europe or the United States.
Imagine a business in one African country buying from a supplier in another.
The payment can look something like this:
Buyer → local bank → correspondent bank → hard-currency conversion → another intermediary → recipient bank → seller
The transaction may be commercially simple. The payment behind it is not.
PAPSS and Afreximbank estimate that the dependence on hard currencies and external settlement infrastructure costs Africa around $5 billion annually in fees and related friction.
That estimate should be treated as an institutional estimate rather than a universal transaction-cost measure. But the underlying problem is well established: cross-border payments within Africa remain more expensive and slower than domestic payments.
Afreximbank cited World Bank remittance data in 2026 showing average cross-border transfer costs in Africa of around 7% to 8% of the amount sent, with settlement in some cases taking three to seven business days.
For SMEs in particular, these costs matter.
Large corporations can absorb foreign-exchange spreads, banking fees, treasury costs and compliance overheads. Smaller businesses often cannot.
What is PAPSS?
The Pan-African Payment and Settlement System, or PAPSS, is one of the main pieces of financial infrastructure being built to address this problem.
PAPSS is a cross-border payment and settlement platform developed by Afreximbank in collaboration with the African Union and the AfCFTA Secretariat.
It was commercially launched in Accra in January 2022.
Its basic proposition is relatively simple: allow payments between African countries to be initiated and received in local currencies without requiring every transaction to pass through a hard currency first.
In practical terms, a payer sends money in their own currency and the recipient receives money in theirs.
PAPSS handles the payment infrastructure in between.
According to PAPSS, near-instant payments can be processed within 120 seconds.
That is a fundamentally different experience from a payment chain involving several correspondent banks and multiple FX conversions.
How PAPSS works
At a simplified level, the process looks like this:
Payer → local bank or payment provider → PAPSS → recipient bank or payment provider → beneficiary
The payer issues a payment instruction in their local currency.
PAPSS validates the instruction and routes it to the recipient’s financial institution.
The beneficiary then receives the funds in their own local currency.
The system also uses multilateral net settlement rather than requiring every individual transaction to be settled separately across borders. Afreximbank provides settlement support and guarantees around the infrastructure.
In theory, this reduces dependence on correspondent banking and external reserve currencies.
But PAPSS should not be understood as simply an African version of a global messaging system.
It is part payments network, part settlement infrastructure and increasingly part foreign-exchange infrastructure.
PAPSS is becoming more than a payment rail
An important development came in July 2025 with the launch of the PAPSS African Currency Marketplace, or PACM.
The aim is to address another part of the problem: liquidity between African currencies.
A payment rail alone does not solve everything.
A bank may be technically able to send money from one country to another, but somebody still has to provide liquidity between the two currencies involved.
PACM is designed to create a continent-wide marketplace for African currencies rather than forcing institutions to rely as heavily on offshore hard-currency markets.
PAPSS said at launch that the marketplace was intended to address the friction caused by Africa’s 41 currencies and limited currency convertibility.
This is an important distinction.
Payments infrastructure solves how money moves.
Liquidity infrastructure helps solve how one currency becomes another.
AfCFTA needs both.
Does PAPSS eliminate the dollar from intra-African trade?
No. That is one of the easiest ways to oversimplify what PAPSS is trying to achieve.
PAPSS can reduce the need to route an intra-African payment through dollars or another external reserve currency. That does not mean the dollar suddenly disappears from African trade.
Companies still need international currencies for imports from outside Africa, debt payments, commodities, investment flows and many forms of trade finance.
There is also a difference between reducing unnecessary dollar intermediation and creating sufficient liquidity between dozens of African currency pairs.
The latter is considerably harder.
PAPSS therefore makes more sense as an attempt to build additional financial plumbing for intra-African trade than as a de-dollarisation project.
Where PAPSS stands in 2026
The network has moved beyond its original West African footprint, although continental coverage is still incomplete.
By July 2025, PAPSS said it was operating across 17 countries, connected to 14 national payment switches and more than 150 commercial banks.
Expansion has continued.
In February 2026, Kenya’s Pesalink announced a connection to PAPSS. Pesalink said its network of more than 80 banks, fintechs, SACCOs and telecommunications companies would connect into a PAPSS network covering more than 160 participating banks and fintechs.
PAPSS also lists live bank connectivity in markets including Ghana, Nigeria, Sierra Leone, Liberia, The Gambia and Guinea, with additional markets being integrated.
This is progress.
But it is not the same as saying that Africa now has a seamless continental payments market.
The infrastructure is still being connected.
And that is the broader story of AfCFTA itself.
Payments are only one part of the infrastructure gap
The Mo Ibrahim Foundation’s 2026 report Africa on the Move makes a wider point about continental integration.
Africa’s infrastructure was historically built to connect domestic economies to external export markets rather than to connect African economies with one another.
The report describes much of the continent’s transport connectivity as still “outbound”, reflecting an economic model built around exporting commodities outside Africa.
Air travel offers a good example of what this looks like in practice. In a previous Emerging Markets Today analysis, Why Intra-African Flights Are So Expensive (And What Could Change), we looked at how limited direct routes, high airport taxes, fuel costs, currency risk and weak competition can make flying between African cities more expensive than travelling much farther outside the continent.
The payments problem follows a similar pattern.
In both cases, the issue is not a lack of demand for integration. It is that much of the underlying infrastructure was never designed around efficient intra-African movement.
For decades, it has often been easier for money, goods or people to move between an African economy and a global hub than between neighbouring African markets.
AfCFTA is effectively trying to reverse that architecture.
That requires more than signing a trade agreement. It means connecting domestic payment systems, improving transport links, building digital identity infrastructure, harmonising regulations and making it easier for businesses to operate across borders.
Digital identity and KYC remain part of the problem
Cross-border payments do not exist separately from compliance.
A financial institution still has to know who is sending money, who is receiving it and whether the transaction complies with anti-money-laundering and sanctions requirements.
Those rules are implemented differently across African markets.
So even if the payment rail itself becomes faster, onboarding and verification can remain fragmented.
That creates another potential infrastructure layer around interoperable digital identity, KYC utilities and compliance APIs.
For fintech companies, this may ultimately be as important as the payment rail itself.
Regulation is still national
AfCFTA is continental.
Financial regulation is mostly national.
That tension is not going away quickly.
A fintech that wants to operate across multiple African markets may still need different licences, local partnerships, compliance processes and data arrangements in each jurisdiction.
The payment may cross the border in seconds.
The regulatory approval process certainly does not.
This is why financial integration cannot be measured only by the speed of a transaction.
The real question is how much of the underlying market infrastructure becomes interoperable.
Why this matters particularly for SMEs
The strongest argument for improving cross-border payment infrastructure is probably not that it makes life easier for banks.
It is what it could do for smaller businesses.
Large companies have treasury departments and established correspondent banking relationships.
An SME exporting food, textiles, software or professional services across an African border generally does not.
Every additional FX conversion or banking fee therefore represents a larger share of the transaction.
This matters for AfCFTA because the agreement is supposed to expand the number of African businesses that can participate in regional trade, not simply make existing corporate trade flows slightly cheaper.
A single market becomes meaningful when relatively small businesses can use it.
The fintech opportunity is in the infrastructure around the infrastructure
For African fintech, PAPSS creates opportunities beyond simply connecting to another payment network.
There are potential businesses around:
- cross-border B2B payments
- FX and treasury management
- liquidity
- compliance
- digital identity
- payment APIs
- merchant services
- trade finance
- reconciliation
- embedded finance
The opportunity is particularly interesting where new continental infrastructure meets fragmented national systems.
Someone still has to make those systems usable.
That may be where fintech has the strongest role.
AfCFTA’s real test is interoperability
It is tempting to measure progress through milestones.
A new country joins PAPSS.
Another payment switch connects.
Another AfCFTA protocol is adopted.
All of those developments matter.
But interoperability is ultimately a better test.
Can a company in one African market find a customer in another, verify them, invoice them, receive payment, exchange currency, clear compliance checks and move goods without the process becoming prohibitively expensive?
If the answer is no, the existence of a free trade agreement only solves part of the problem.
The Mo Ibrahim Foundation’s recent research makes a similar point from the perspective of physical mobility and infrastructure: continental integration depends on the practical ability to move people, goods and services across Africa, not simply on political commitments.
Payments belong in that same conversation.
Key milestones in Africa’s payments and trade infrastructure
2018: The AfCFTA Agreement is signed.
2019: The agreement enters into force. PAPSS is announced by Afreximbank and the African Union.
2021: Trading under AfCFTA formally begins on 1 January.
2022: PAPSS is commercially launched in Accra.
2025: PAPSS says it has reached 17 countries and more than 150 commercial banks. The PAPSS African Currency Marketplace launches.
2026: Kenya’s Pesalink connects to PAPSS, linking its domestic network with more than 160 participating PAPSS banks and fintechs.
What still has to happen
Africa now has more of the institutional architecture for a single market than it did five years ago.
The harder phase is connecting it. PAPSS needs broader adoption.
Local currencies need deeper liquidity.
Domestic instant-payment systems need to become more interoperable.
Digital identity and KYC infrastructure need to work across borders. Regulation needs to become easier to navigate.
And SMEs need to be able to access these systems at prices that make regional trade commercially worthwhile.
None of these problems are as visible as signing a trade agreement. But they may ultimately determine whether AfCFTA works.
FAQ
What is PAPSS?
PAPSS, the Pan-African Payment and Settlement System, is financial infrastructure designed to enable cross-border payments between African countries in local currencies. It was developed by Afreximbank in collaboration with the African Union and the AfCFTA Secretariat and commercially launched in January 2022.
Why are cross-border payments expensive in Africa?
African cross-border payments can involve correspondent banks, multiple currency conversions, foreign-exchange spreads, compliance processes and limited direct liquidity between African currencies. These layers make many transactions slower and more expensive than domestic payments.
Does AfCFTA have a common currency?
No. AfCFTA is a trade agreement, not a monetary union. African countries continue to use their national and regional currencies.
Can PAPSS replace SWIFT?
Not directly. SWIFT primarily provides financial messaging infrastructure, while PAPSS is designed around payment processing, clearing and settlement for intra-African transactions. The systems serve different functions.
Can PAPSS eliminate the US dollar from African trade?
No. PAPSS can reduce the need to use the dollar or other external currencies as intermediaries in some intra-African payments. It does not eliminate demand for international currencies across African trade, investment and finance.
What is stopping AfCFTA from becoming a true single market?
Tariff liberalisation is only one part of the challenge. Trade also depends on payments, transport, customs, digital identity, regulatory interoperability, currency liquidity and other forms of infrastructure. AfCFTA’s long-term success therefore depends on how effectively these systems are connected across African markets.
Last updated: September 2026
Sources: African Union, AfCFTA Secretariat, Afreximbank, Pan-African Payment and Settlement System (PAPSS), Mo Ibrahim Foundation and World Bank data cited by participating institutions.
Analysis: Emerging Markets Today
