KCB Group, one of East Africa's leading financial institutions, has made a significant stride by signing an Africa-wide agreement aimed at streamlining cross-border transactions on the continent.

The deal, forged with the Pan-African Payment and Settlement System (PAPSS) during the Afrexim Bank Annual Meeting in Accra, Ghana, establishes KCB as the first bank in East Africa to join this financial market infrastructure, thereby ensuring secure and efficient processing of cross-border payments.

Paul Russo, the CEO of KCB Group, expressed enthusiasm about the potential benefits of this groundbreaking partnership.

He emphasized that the newly established platform would provide customers with faster, more affordable, and reliable transactions, consequently promoting intra-African trade and payments.

"With this agreement, we bring on board our payments and collections expertise spanning over 120 years. This means that our customers will now have access to vast economic opportunities that will deliver multiple advantages and efficiencies, especially when conducting intra-African trade payments," Russo stated.

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The centralized Financial Market Infrastructure, developed in collaboration with the African Export-Import Bank (Afreximbank), serves as an alternative to the current correspondent banking relationships, which are known for their high costs and lengthy processes.

Its primary objective is to facilitate trade and other economic activities among African countries through a simple, low-cost risk-controlled payment clearing and settlement system.

The platform's implementation aligns with the Africa Continental Free Trade Area (AfCFTA), a critical regional initiative aimed at enhancing trade integration.

"As a Pan-African banking institution, it is our desire to play a bigger role in facilitating trade across Africa and beyond. With such partnerships, we shall be able to settle our own transactions, including those for all our subsidiaries, as well as for other commercial banks without many hurdles," explained Russo, emphasizing the institution's commitment to supporting cross-border trade in Africa.

The introduction of this platform is expected to deliver numerous advantages and efficiencies to intra-African trade payments.

These include reducing the duration and time variability of cross-border payments across Africa, supporting real-time payments, decreasing the liquidity requirements of commercial banks for cross-border transactions, removing transaction value limits, enabling commercial banks to set applicable exchange rates, and strengthening the oversight of cross-border payment systems by Central Banks.

The Pan-African Payment and Settlement System network, which currently includes at least 8 Central Banks, 28 commercial banks, and six switches, has already undergone successful piloting in the six countries of the West African Monetary Zone.

The initiative is set to expand into the five regions of Africa before the conclusion of 2023.

Furthermore, it is anticipated that all African Central Banks will sign up by the end of 2024, while commercial banks across the continent will join by the end of 2025.

This landmark agreement marks a significant step towards facilitating seamless cross-border transactions and promoting economic growth and integration across the African continent.

As KCB Group paves the way as the first East African bank to join the Pan-African Payment and Settlement System, it sets a precedent for other financial institutions to follow suit, ultimately bolstering Africa's position in the global marketplace.