SEC: PAPSS Implementation Will Aid Capital Market Diversification

Kayode Tokede

The Securities and Exchange Commission (SEC) has said that it is excited about the implementation of the Pan-African Payment Settlement System (PAPSS) as it will encourage intra-African trade and aid diversification within the capital market.

This was stated by Head, Office of the Chief Economist of the SEC, Dr. Okey Umeano during an interview in Abuja.

The Nigerian Exchange and the Pan-African Payment Settlement System recently signed a Memorandum of Understanding to support cross-border payments across capital markets in Africa.

According to Umeano, “this MoU begins to implement something that we have been very excited about. PAPSS makes it easy to trade across Africa. It makes Intra-African trade more efficient and we have always wanted it. It was created initially for just the usual everyday trade but we have always wanted it for the capital market because we think that if we can link the exchanges and the markets across the continent we will have a bigger opportunity set for everybody, so we have been working on that. 

“We have two projects the West African Capital Market Integration project and the African Exchanges Linkage project but the problem we have always had was how to settle, how do we make payments happen? If I want to buy a Ghanaian stock, do I have to change my naira to dollars and then from dollars back to cedi’s and all that. These where all the problems we had but with PAPSS, we can make this trades more efficient and easier. I can trade in naira and whoever I am buying from in Ghana or wherever in Africa receives in the local currency so this is a good thing and we thank Afrexim bank.

Umeano also commended the NGX for taking the lead on this, the MoU allows them to stick this up with the Ghana stock exchange and we hope that other exchanges and other market players will key in and take this opportunity. 

He stated that given the way the markets are, this implementation will improve opportunities for diversification and make markets able to perform better.

“Given the way the markets are; it improves the opportunity for diversification. It improves the opportunity set everywhere. Let me give you an example, a couple of years ago when our market didn’t do so well, our bond market didn’t do so well we had issues around currency and we had the foreign investors leaving. It was reported that the market in Côte d’Ivoire, the eight nations French union their market did much better, ” he said.