The Central Bank of Kenya (CBK) has formally endorsed the Pan-African Payment and Settlement System (PAPSS), joining a push to facilitate seamless cross-border payments across the continent and reduce the cost of trade. The endorsement, confirmed on July 20, 2026, aligns Kenya with a growing number of African nations seeking to settle transactions in local currencies rather than relying on the US dollar.
Developed by the African Export-Import Bank (Afreximbank) in collaboration with the African Continental Free Trade Area (AfCFTA) Secretariat, PAPSS is designed to act as a central financial market infrastructure for the continent. The system allows commercial banks and payment service providers across Africa to connect, enabling instant cross-border payments in local currencies. By facilitating direct currency conversions, the platform aims to eliminate the need for multiple correspondent banks and the associated dollar conversions that currently add cost and delay to intra-African trade.
“The adoption of PAPSS is a significant step towards enhancing the efficiency of cross-border payments within Africa,” the CBK stated. The bank noted that the system would reduce transaction costs, shorten settlement times, and bolster financial inclusion by making regional trade more accessible for small and medium-sized enterprises. The move is seen as a direct effort to support the implementation of the AfCFTA, which seeks to create a single market for goods and services across 55 African countries.
High transaction costs and lengthy settlement periods, often taking several days, have long been a barrier to intra-African commerce. These inefficiencies stem from a reliance on correspondent banking networks outside the continent, primarily involving conversions to hard currencies like the US dollar and the euro. The CBK estimates that these existing structures can add between 3% and 5% to the cost of a cross-border transaction for Kenyan businesses, a burden that PAPSS is designed to mitigate.
Kenya’s participation follows the lead of several other African central banks that have already integrated with the system, including those from Nigeria, Ghana, and the Gambia. The system’s rollout is part of a broader continental strategy to deepen financial integration and retain more value within African economies. Proponents argue that reducing dependency on external currencies for regional trade will enhance monetary sovereignty and protect economies from global foreign exchange volatility.
Financial institutions in Kenya are now expected to begin the technical integration process to connect to PAPSS. The CBK has indicated it will work with commercial banks and fintech companies to ensure a smooth onboarding. This integration could significantly benefit Kenyan exporters and importers, particularly in key regional trade corridors with fellow East African Community members and other AfCFTA partners.
The endorsement places the CBK at the center of a shifting payments landscape in Africa, where mobile money systems like M-Pesa have already demonstrated the potential for digital financial innovation. Analysts suggest that linking such robust domestic digital payment ecosystems to a continent-wide settlement system like PAPSS could accelerate the formalization of cross-border trade and unlock new economic opportunities.