The African Continental Free Trade Area (AfCFTA) has convened a special committee on Finance, Monetary Affairs, Economic Planning and Integration to discuss a payment system to facilitate its effective implementation.
The meeting will include African Finance Ministers who will also be discussing the planned launch of the AfCFTA which kicks off on January 1, 2021.
The meeting, themed, ‘Securing Africa’s Taxing Rights, Stemming Illicit Financial Flows and Developing Payment Systems for AfCFTA,’ scheduled for December 1-3, 2020, will include an African Union (AU) Commission.
The meeting will address the following issues on:
- The global tax debate regarding the tax challenges arising from the digital economy, and how this affects Africa
- Stemming Illicit Financial Flows (IFFs) on the continent
- The Development of a Continental Payment System to facilitate effective implementation of the African Continental Free Trade Area (AfCFTA)
The upcoming STC on Finance, Monetary Affairs, Economic Planning and Integration will address the Global Tax debate & the digital economy tax; Stemming Illicit Financial Flows; & developing a Payment System to facilitate implementation of #AfCFTA.
Details- https://t.co/rTBwXQBsWZ pic.twitter.com/FnWYU4YgdI
— African Union (@_AfricanUnion) November 24, 2020
The AfCFTA implementation, which was scheduled for mid 2020, was postponed due to disruptions caused by the Covid-19 pandemic, till January 1, 2021.
The AfCFTA agreement sets new mechanisms to enable countries trade between each other. Some of these include:
- Determining the rules of origin
- A digital payment system
- An online tool for listing products and tariffs
- A monitoring system to deal with non-trade barriers
A digital payment processing platform, dubbed, Pan-African Payment and Settlement System (PAPSS), has previously been touted by Afreximbank. The platform claims to enable and develop a framework that would integrate and accelerate the cross border and intra-regional trade for the ease of cross-border payments. It is supported by the Trade Finance Bank for Africa.
Today is a historic day in #Niamey as #Afreximbank launches the Pan-African Payment and Settlement System (PAPSS), which will transform how Africa trades. What is PAPSS? What is in store? How will it impact #AfricanDevelopment?#PAPSS#AfricanTradeAccelerated
— Afreximbank (@afreximbank) July 7, 2019
PAPSS was developed by Afreximbank in partnership with the Central Banks in the West African Monetary Zone (WAMZ) and the West African Monetary Institute (WAMI). It was designed to operate continentally but with initial start of operations in the WAMZ region and subsequent extension to the rest of the continent in collaboration with Central Banks as conceived from inception.
The system was launched by the AU Summit of Heads of State and Government, in July 2019 in Niamey, Niger, as one of the key instruments to support the AfCFTA and the expectation of the leaders was that PAPSS should be operational before trading under the AfCFTA commences.
When implemented, the AfCFTA will form the largest trade zone in the world after the WTO (since 1994) having all the 55 countries in Africa under the agreement, representing 16.7% (1.3 billion people) of the global population.
1st January 2021 will be a momentous day for Africa, as trading under the African Continental Free Trade Area (AfCFTA) will begin. Mark your calendars and join us in the coming weeks as we count down to this historic day.#AfCFTA #AfCFTACountdown #AfCFTAStartofTrading #Africa pic.twitter.com/LLECdK4Q5h
— AU-TradeIndustry (@AUTradeIndustry) November 26, 2020
A recent report by the World Bank on the AfCFTA said that if the agreement is fully implemented, it could boost regional incomes by 7% or $450 billion, and lift millions of Africans out of poverty by 2035.
According to the report:
- Total exports would increase by almost 30% by 2035
- AfCFTA would lift 30 million Africans from extreme poverty
- Intra-continental exports would increase by over 80%
The report also revealed that some of the African countries that would see double and triple growth in exports include:
Currently, Africa accounts for less than 3% of the global trade and GDP and the implementation of the AfCFTA is expected to change this in a big way, not just for the economies of Africa, but for global trade as well.
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