The Nigerian Exchange Limited (NGX) and the Pan-African Payment Settlement System (PAPSS), on Tuesday, signed a Memorandum of Understanding (MoU) to facilitate cross-border payments across capital markets on the African continent.
At the virtual signing ceremony, stakeholders said the partnership between NGX and PAPSS would boost trade in the capital markets in Africa.
PAPSS is a continental payment system developed by the Africa Export-Import Bank to facilitate trade and investment across Africa.
In his remarks, the Chief Executive Officer, NGX Limited, Temi Popoola, said, “There are not several mechanisms by which investors can carry out cross-border capital market investments on the African continent. One challenge that all of these mechanisms face is the lack of compatibility of local currencies across African countries and, by extension on African exchanges. It is important to efficiently settle transactions in local currencies and this is where the collaboration between NGX and PAPSS comes in.
“One fact that data consistently shows is that local capital is extremely critical to driving deep, stable and less volatile capital markets. There is indeed local capital available in many African countries. There is, however, a huge barrier to the flow of this capital as we have seen across the local markets and across the African continent as a whole. We are of the firm belief that the integration of PAPSS into the African capital markets will reduce some of these frictions and as a result deepen the flow of local capital across African exchanges.”
On his part, the Managing Director, PAPSS, Mike Ogbalu, said the effects of the partnership would impact many on the African continent.
He said, “Today nine central banks have joined the PAPSS network. More than 50 of the largest commercial banks have signed up and the banks in Nigeria and Ghana are fully operational and doing transactions as we speak. Additionally, we have signed up seven national switches and private sector switches as well the national switches in Nigeria and Ghana, which are now live and transacting.
“With NGX as our strategic partner, we expect more transactions to flow into our system but also, we expect more central banks to join to extend reach to billions more with the resultant impact on inter-Africa trade.”
The President of Afreximbank, Prof. Benedict Oramah, said that the signing of the MoU came at a time to boost the recently-signed investment protocol of the African Continental Free Trade Agreement.
He said, “This is becoming a reality at a very opportune time. Just two weeks ago in Addis Abba at the summit of the African Union, the investment protocol of the African continental free trade agreement was approved by the heads of state and government providing the platform that would support cross-border investment in Africa.
“We cannot promote investment and growth on our continent without integrating our capital markets and our securities market. The role of PAPSS is critical in helping to achieve this.”
Also, the Director-General, Security and Exchange Commission (SEC), Mr. Lamido Yuguda, said that the signing of the agreement was a significant milestone in line with the revised Capital Market Masterplan.
Yuguda said, “SEC will support all initiatives to enhance the integrity and efficiency of the capital market.”
Expressing his optimism about the potential of the initiative, the Chairman, Nigerian Exchange Group (NGX Group), Alhaji Umar Kwairanga, said the agreement would open up new market opportunities to capital market operators across the continent.
Mr. Oscar Onyema, Group Chief Executive Officer, NGX Group, said the initiative came at the right time when Africa wants to accelerate the implementation of AfCFTA.
“It will stimulate the development of intra-African securities trading,” Onyema said.
Commending the initiative, the President, African Securities Exchange Association (ASEA), Mr Thalepo Tsheole, called on stakeholders to come together and ensure it is executed across Africa.
He emphasised that using the umbrella of ASEA, with nine exchanges and a market cap of 1.5 trillion dollars, PAPSS could be instrumental to the African Exchanges Linkage Project.
Agency report
