In a move to boost trade in the capital markets in Africa, the Nigerian Exchange and the Pan-African Payment Settlement System (PAPSS) has signed a Memorandum of Understanding to facilitate cross-border payments across capital markets on the African continent.
PAPSS is a continental payment system developed by the Africa Export-Import Bank to facilitate trade and investment across Africa.
The Chief Executive Officer of Nigerian Exchange Limited, Temi Popoola, at the signing stated thus:
“There are not several mechanisms by which investors can carry out cross-border capital market investments on the African continent. One challenge that all of these mechanisms face is the lack of compatibility of local currencies across African countries and, by extension on African exchanges. It is important to efficiently settle transactions in local currencies and this is where the collaboration between NGX and PAPSS comes in.
“One fact that data consistently shows is that local capital is extremely critical to driving deep, stable and less volatile capital markets. There is indeed local capital available in many African countries. There is, however, a huge barrier to the flow of this capital as we have seen across the local markets and across the African continent as a whole. We are of the firm belief that the integration of PAPSS into the African capital markets will reduce some of these frictions and as a result deepen the flow of local capital across African exchanges.”