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Tunisia’s central bank has joined the Pan-African Payment and Settlement System (PAPSS), a scheme that aims to reduce reliance on foreign exchange reserves by enabling payments for intra-African trade to be made in local currencies.

Banque Centrale de Tunisie (BCT), the first North African bank to sign up to PAPSS, joins under the commercial bank settlement model, which means the lender will promote the use of the Tunisian dinar for intra-African cross-border payments and preserve its foreign currency reserves.

BCT joins 12 other central banks from across the continent, including those of Ghana, Kenya, Malawi, Nigeria, Rwanda, Zambia and Zimbabwe. More are expected to join this year.

Commercial banks and other payment service providers can sign up as participants and make use of the centralised system, which handles the processing, clearing and settling of cross-border trade payments.

BCT governor Marouane El Abassi says the decision to become part of the scheme is due to the Tunisian government’s attempts to integrate the country into the African Continental Free Trade Area (AfCFTA), and calls on banks to sign up as participants.

PAPSS was launched in 2021 and developed by the African Export-Import Bank (Afreximbank), the African Union and the AfCFTA Secretariat.

PAPSS chief executive Mike Ogbalu says that the addition of BCT “highlights the growing recognition” of the system’s role in simplifying cross-border payments. “As PAPSS continues to expand its membership base, we are encouraged by the commitment of central banks in facilitating trade and investment flows within Africa,” he says.

“At Afreximbank, we have unwavering confidence that PAPSS will revolutionise the payment landscape within Africa, ultimately benefiting our people,” adds George Elombi, Afreximbank’s executive vice-president.

In June last year, Afreximbank also launched a single portal that gives access to several digital platforms, including PAPSS, in another bid to strengthen and promote intra-African trade.