Pan-African Payment System Aims for Local Currency Efficiency, Not Dollar Replacement

The Pan-African Payment and Settlement System (PAPSS) is advancing cross-border transactions in local currencies, though its leadership denies explicit de-dollarization objectives. Launched in January 2022, the infrastructure mirrors global efforts to reduce dollar dependency while sidestepping direct confrontation with the U.S. financial system.

Mike Ogbalu, PAPSS CEO, emphasizes the economic rationale: African trade costs run 50% above global averages due to reliance on third-party currencies and overseas banking intermediaries. Shifting to local settlements could save $5 billion annually in hard currency expenses. "Bypassing the dollar is a pragmatic calculation, not an ideological stance," Ogbalu notes, acknowledging the risks of U.S. sanctions under current geopolitical tensions.

Syracuse University's Daniel McDowell observes that developing nations face a delicate balancing act—curbing dollar exposure without triggering Washington's ire. The PAPSS model reflects this nuance, promoting regional monetary sovereignty while maintaining transactional links to the greenback.