Last week’s call by President William Ruto for African nations to embrace the continent’s own clearing system amounts to a critical piece of African leadership, in transforming payments from one African country to another that have long been slow, frequently lost, and cost an extra $5 billion a year to route through the US or Europe.
While the Pan-African Payment and Settlement System (PAPSS) was launched in January 2022, 18 months later, it has been joined by just nine central banks, 40 commercial banks and four switches, according to wearetech.africa, rendering it moribund until more climb aboard.
However, payments across Africa via the US are just part of an internal disconnect that still plagues the continent.
Indeed, one study by our own media group found most African national audiences disinterested in the news from the rest of Africa, and split, instead, between referencing the US or the UK.
This pivoted focus away from our neighbours and peers has fuelled all manner of neglect, under-representation and emasculation for Africa as a result of the continent’s consequent fragmentation.
Thus, the President’s nearly simultaneous moves to form a cohesive continental voice on climate finance and to waive business visas for Africans entering Kenya represent a much-needed deck for forging a shared African voice.
These are powerful next steps following the creation of the African Continental Free Trade Area and the African Union’s work since it was formed in 2002.
And, in this, bank clearing demonstrates the cost to Africa of its external referencing: for it has put global anti-money laundering politics into every African small business that sources or sells beyond its own borders.
For rules elsewhere, such as in the US, are more rational – a reference to the Fed if you deposit more than $10,000 in cash.
But when it comes to African transactions, the starting point is 10 countries, most recently South Africa and Nigeria, grey listed internationally in anti-money laundering controls.
This means every international transaction must undergo additional checks.
Kenya isn’t on the current grey list, but just to be African is a risk in a US banking system hit with billions of dollars in fines for insufficient checking.
Thus, in January 2020, I experienced a payment of just $1,837.50 from the Nairobi operation of a global agency stopped for six months before its eventual return: a small amount to a regular supplier by a prestigious organisation: yet it was permanently blocked on a risk that was unknowable.
Of course, we need full and proper checks in all our banking systems for anti-money laundering. But the ‘Africa is risk’ game that excessively hinders everyday business? That we need to abandon, and at all possible haste.