On June 26, the Pan-African Cost and Settlement System (PAPSS), the intra-African cost initiative, launched a brand new product for real-time cross-border settlements throughout Africa. The product, known as the African Foreign money Market, will allow companies to settle transactions instantly in African currencies with out routing them via the US Greenback, the Euro, or another international foreign money.
Introduced on the sidelines of the 2025 Afreximbank Annual Assembly, the African Foreign money Market is constructed on the Bantu blockchain community that helps enterprise-level African funds and is overseen by Interstellar, a pan-African infrastructure firm, to help as much as 42 currencies.
“We checked out how we may leverage blockchain expertise to deal with Africa’s distinctive challenges,” mentioned Ernest Mbenkum, Interstellar CEO, on the occasion. “We targeted on utilizing this infrastructure to develop the Bantu Blockchain. By means of this platform, we have been capable of discuss to varied companions within the trade—business banks, central banks, and PAPSS—to see how we may start to deal with the challenges that the continent confronted.”
The African Foreign money Market will allow the direct change of native currencies, decreasing prices and delays related to routing via foreign currency echange. It’s an try to deal with the cost fragmentation that continues to gradual intra-African commerce beneath the African Continental Free Commerce Space (AfCFTA). It additionally alerts one thing extra: it may lead to an enormous stablecoin adoption throughout Africa.
cNGN, the stablecoin pegged to the Nigerian Naira, is already dwell on the Bantu blockchain, with over ₦52 million ($33,800) minted on the community. In comparison with onerous fiat currencies, stablecoins are simply sourced, offered stable, collateralised reserves again them. Their location-agnostic nature additionally signifies that the price of sending stablecoins anyplace on the continent will incur the identical low value.
Interstellar, which companions with PAPSS, is a core member of the cNGN undertaking, making a stablecoin integration extra viable. If cNGN integration is profitable, it may spur extra African nations to arrange nationwide initiatives to create stablecoins pegged to native currencies and debut them on the Bantu blockchain. This won’t solely speed up stablecoin adoption but additionally enhance liquidity and accessibility, notably for much less generally used currencies in Africa.
Fragmentation prices companies and multinationals huge cash
Africa’s 42 nationwide currencies create an internet of 861 distinctive intra-African cost corridors, every representing a direct foreign money pair via which cross-border funds can circulation. In follow, nonetheless, most of those corridors should not instantly accessible.
When a enterprise in Kenya needs to pay a provider in Senegal, the Kenyan shilling should sometimes be transformed first to US {dollars}, then from {dollars} to West African CFA francs. Every leg of this conversion introduces further change price spreads and charges, so the provider finally receives lower than the unique worth despatched, typically considerably much less, on account of these cumulative prices and inefficiencies.
This inefficiency just isn’t trivial. Africa reportedly loses $5 billion yearly to “leakages” and international foreign money dependency in intra-African funds.
Aviation is one sector hit onerous by Africa’s cost fragmentation. Airways typically can’t transfer their earnings out of sure nations due to foreign money restrictions and depreciation. In June, the Worldwide Air Transport Affiliation (IATA) reported that $1.8 billion in airline funds is caught, with nearly all of affected nations being in Africa. As Mike Ogbalu, PAPSS CEO, has typically highlighted, these sorts of limitations present why higher cross-border cost options are wanted.
The issue is double-layered. First, regulatory fragmentation signifies that every nation enforces its personal guidelines for funds, anti-money laundering (AML), and counter-terrorism financing (CFT) checks, making seamless cross-border funds troublesome.
Second, persistent fraud and distrust within the banking and funds sector have led governments to turn into hesitant about adopting workarounds, reminiscent of licence passporting. Not like the European Financial Space (EEA), the place a single licence grants entry to 27 nations, African monetary establishments should search approval in every market. This slows the rollout of options and limits liquidity for less-traded African currencies, leaving many cost corridors underdeveloped.
PAPSS, launched in 2022 by the African Export-Import Financial institution (Afreximbank), got down to tackle these challenges. Presently, PAPSS has 15 African central banks and 12 cost switches on its community. Since its launch, it has onboarded 56 business banks in Ghana, Sierra Leone, Gambia, Liberia, Zimbabwe, Djibouti, Guinea, and several other different nations. Different banks from Tunisia, the Comoros, Uganda, and Egypt are being built-in into PAPSS, indicating a rising institutional dedication to the initiative.
In some circumstances, central banks have incentivised this participation. In April, the Central Financial institution of Nigeria (CBN) mandated business banks to hitch PAPSS. In Could, 22 Nigerian banks joined PAPSS and at the moment are being onboarded on the dwell platform.
PAPSS’s adoption of Interstellar’s expertise, delivered through Bantu, additionally marks the primary time African governments will undertake blockchain expertise at a multinational scale. But, whereas institutional buy-in is rising, PAPSS’s top-down method has to date struggled to have an effect on Africans on the grassroots degree. The broader adoption of this intra-African resolution by shoppers and SMEs stays the subsequent frontier.
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