Payment and Settlement Systems and the African Continental Free Trade Area

Payment and settlement systems are the structures that make it possible to transfer funds between trading partners and/or between banks. Most economic activities are inconceivable without the transfer of money. Payment and settlement systems constitute a critical fulcrum around which economic agents conduct trade and finance safely and efficiently. It is, therefore, imperative for Africa to have efficient and safe payment system(s) to support cross-border trade. There are many national and regional payment systems in Africa. In some instances, countries subscribe to more than one regional payment system. The payment systems overlap on the continent is analogous to the overlap across regional economic institutions that have been a feature of economic integration in Africa. An effective and efficient continental payment system can increase cross-border trade and assist in the realization of the ideals of the African Continental Free Trade Area (AfCFTA). This chapter reviews the national and regional payment systems across Africa and assesses the binding constraints for interoperability, drawing on experiences from other parts of the world.