Africa-Caribbean payment system needed for investment and trade

The lack of a payment settlement system between Africa and Barbados and other Caribbean Community (CARICOM) states could slow the integration officials are seeking to achieve between the two regions.

This caution has come from Chief Executive Officer of the Pan-African Payment and Settlement System (PAPSS) Mike Ogbalu, who said he believed such a system was necessary to make the proposed deepening of investment and trade relations a reality.

“When you talk about infrastructure and logistics to support trade, tourism, investments and so on, one key element is payment. Trade doesn’t happen without payment. Tourism, when people move they have to be able to spend. Investment is also the movement of funds. So, clearly, if we do not have payments sorted then the integration we would like to have may not happen,” Ogbalu said during the recent AfriCaribbean Trade and Investment Forum at the Lloyd Erskine Sandiford Centre, which was held under the theme One People, One Destiny: Uniting and Reimagining our Future.

He said the PAPSS, which was officially introduced by the African Export-Import Bank (Afreximbank) in January this year, could serve as a settlement system between CARICOM and Africa.

However, he acknowledged that there would need to be infrastructure put in place by the relevant authorities including central banks.

PAPSS is a payment clearing and settlement system that allows for real-time cross-border transactions among African states in their local currencies.

“Bringing it to the Caribbean . . . if we are able to put in place an infrastructure, first of all, or support CARICOM and the ECCB [Eastern Caribbean Central Bank] to put in place an infrastructure that brings together all the central banks in the Caribbean and then put an infrastructure that connects that platform all the way to the PAPSS . . . that will have a major accelerating effect on everything we do together as a people,” he said.

Ogbalu said having the payment system in place would eliminate the need for third-party correspondent banking and would lend to greater efficiency and more timely settlements.

“We think that by bringing efficiency to payments we can actually accelerate trade, accelerate tourism. When people travel they want to spend and they want to know that those transactions can be settled,” he said.

“PAPSS has created a payment reel that will be able to guarantee that member states are able to trade with each other in their domestic currencies. What that would do is begin to lower the hunger for third-party global currencies,” he said.

Coming out of the three-day conference, which ended last Saturday, officials have pledged implementation of strategic partnership between the business communities in the Caribbean and Africa with the objective of fostering bilateral cooperation and engagement in technology transfer, innovation, transport, trade, investment, tourism, culture, and other services.

During the conference, several agreements were signed, signalling the start of the intended deepening of relations between the two regions.