NGX, PAPSS sign MoU on cross-border securities trading across Africa
By Habeeb Adamu
The Nigerian Exchange Limited has signed a Memorandum of Understanding with the Pan-African Payment Settlement System to facilitate efficient and seamless cross-border payment and securities actions across capital markets on the African continent.
Speaking at the virtual signing ceremony, stakeholders said the partnership between NGX and PAPSS would increase trade in the capital markets in Africa. This is based on its design to enable payments for intra-African trades in local currencies using central banks as settlement agents.
Umaru Kwairanga, chairman NGX Group Limited stated that, Under the MoU, PAPSS will facilitate the payment and settlement of transactions in countries of operation between the NGX and the Ghana stock exchange.
Kwairanga said PAPSS is a continental payment system developed by the Africa Export-Import Bank to facilitate trade and investment across Africa. He noted that it will facilitate the ongoing efforts to integrate African capital markets through the African Exchange Limited Project.
At the signing, Temi Popoola, chief executive officer, NGX Limited said there are several mechanisms by which investors can carry out cross-border capital market investments on the African continent. He assured that the collaboration between NGX and PAPSS will help in efficiently settlling transactions in local currencies across the continent.
“There is indeed a local capital available in many African countries. 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,” he said.
Presenting an update on the development of PAPSS , Mike Ogbalu managing director, PAPSS,said the effects of the partnership would impact many on the African continent.
Ogbalu said, “Today nine central banks have joined the PAPSS network while more than 50 of the largest commercial banks have signed up and the banks in Nigeria and Ghana are fully operational and doing transactions as we speak.”
In addition, he said PAPSS had signed up seven national switches and private sector switches as well the national switches in Nigeria and Ghana, which have commenced operations.
“With NGX as our strategic partner, we expect more transactions to flow into our system but also, we expect more central banks to join to extend reach to billions more with the resultant impact on inter-Africa trade,” he added.
Benedict Oramah, president of Afreximbank, noted that about six years ago, he was acquainted with the plans by the African Stock Exchanges Association to link up exchanges in the continent.Based on this, he said Afreximbank has put a $3 billion facility to provide settlement.
Oramah also stated that the signing of the MoU came at a time to boost the recently-signed investment protocol of the African Continental Free Trade Agreement (AfCFTA).
He said, “This is becoming a reality at a very opportune time. Just two weeks ago in Addis Ababa at the summit of the African Union, the investment protocol of the African continental free trade agreement was approved by the heads of state and government providing the platform that would support cross-border investment in Africa.
“We cannot promote investment and growth on our continent without integrating our capital markets and our securities market. The role of PAPSS is critical in helping to achieve this.”
On his part, Lamido Yuguda, director general, Securities Exchange Commission (SEC), described the event as “significant”, noting that it was in line with the strategic objectives of facilitating an integrated African capital market.