A dollar-free African payment system could save the continent $5 billion in processing costs, said Tunde Macaulay, head of business and commercial banking at Standard Bank.
He noted that the current system of routing transactions through US or European banks creates delays and costs for African businesses. Macaulay stressed that the new African Continental Free Trade Area pact's unified payment system will significantly improve this situation.
The AfCFTA's new pan-African payment system, using local currencies, aims to make cross-border payments easier and more transparent, potentially bringing $50 billion of informal trade into the official economy and significantly increasing trade within the continent.
Macaulay suggested a gradual approach to integration, starting with reducing trade barriers and supporting small businesses, to create a favorable environment for the new payment system to thrive. While a significant number of banks and service providers have joined the system, its success depends on a coordinated effort and widespread adoption, creating a "network effect" where the value of the system grows as more participants join.
The AfCFTA's $1 billion Adjustment Fund, which aims to grow to $10 billion by 2033, will play a crucial role in supporting governments and businesses during the transition to a free-trade zone. According to Macaulay, the AfCFTA is essential for Africa's prosperity and that its implementation is irreversible.