The Central Bank of Kenya (CBK) has formally endorsed the Pan-African Payment and Settlement System (PAPSS) as a key platform to reduce the cost of cross-border trade payments within Africa. The endorsement, reported on July (21), 2026, positions the system, which is backed by the African Export-Import Bank (Afreximbank), as a central piece of Kenya's strategy to facilitate cheaper and faster transactions for businesses trading across the continent.

PAPSS, launched to enable African businesses to conduct transactions in their local currencies, aims to bypass the traditional reliance on correspondent banks and hard currencies like the US dollar or euro. This move by the CBK aligns with broader continental efforts under the African Continental Free Trade Area (AfCFTA) to reduce financial barriers to intra-African trade. The high cost of converting currencies and the associated delays have long been cited as significant impediments to the growth of trade between African nations.

The CBK's backing comes at a time when other digital payment infrastructures are also expanding their footprint in East Africa. Earlier in July 2026, SCRYPT, a digital asset settlement network, announced the expansion of its stablecoin-based settlement services into four East African markets. While the specific countries were not named in the source material, the move indicates a growing interest in leveraging digital assets for cross-border value transfer in the region, presenting both complementary and potentially competitive dynamics to traditional and new centralized systems like PAPSS.

In a related development within the digital currency space, the remittance platform LemFi has partnered with payments infrastructure provider BVNK to power stablecoin settlements on regulated payment rails. This partnership, also announced in July 2026, focuses on using stablecoins to settle remittance transactions, aiming to improve speed and reduce costs for diaspora communities sending money home. These parallel developments in stablecoin networks highlight a diversifying landscape for cross-border payments in Africa, where solutions range from centralized, bank-led systems like PAPSS to decentralized fintech-driven models.

The endorsement from Kenya's central bank provides significant institutional credibility to PAPSS, which requires the participation of national central banks to function effectively. For Kenyan businesses, the system promises to simplify the process of paying suppliers in other African countries and receiving payments from buyers, potentially improving cash flow and reducing operational friction. The success of such a system, however, hinges on widespread adoption across the continent, requiring similar endorsements and technical integration from other national monetary authorities.

Industry observers note that the coexistence of PAPSS with emerging stablecoin networks will test different approaches to solving Africa's cross-border payment challenges. Proponents of PAPSS argue that its central bank-backed nature ensures stability and regulatory compliance, while advocates for blockchain-based stablecoin settlements point to their potential for near-instantaneous settlement and lower intermediary costs. The coming years will likely see these models evolve, possibly even intersect, as regulators and market participants seek the most efficient pathways to financial integration.