Trade Cabinet Secretary Moses Kuria on Friday announced that Kenya has signed instruments allowing Kenya to join the Pan African Payments and Settlement System (PAPSS) meaning Kenyan companies can trade with other African entities using local currencies.
In a statement, the Cabinet Secretary revealed that this move will enable Kenya to cut overreliance on the dollar, a position that President William Ruto has strongly advocated for in the past.
“I am pleased to announce that the Central Bank of Kenya has signed the instruments that have finally seen Kenya join the Pan African Payments and Settlement System (PAPSS),” Kuria said in the statement.
According to CS Kuria, the move will be a major boost for the African Continental Free Trade Area (AfCFTA), a pact between that advocates for stronger trade ties between African countries.
The Pan-African Payment and Settlement System (PAPPS) is a cross-border, financial market infrastructure enabling payment transactions across Africa.
PAPPS seeks to connect African banks, payment service providers, and other financial market intermediaries enabling instant and secure payments between different countries within the continent.
The technology envisions instant payments from suppliers to beneficiaries in their local currencies, no matter where they are in Africa.
The platform was developed in collaboration with the African Export-Import Bank (AfrExim Bank). Its objective is to ensure African countries align with the larger objective to increase intra-continental trade.
The bold move comes at a time when Kenya is facing a severe drop in valuation against the dollar with the shilling currently retailing at 148 against the dollar.
President William Ruto had initially vowed to reduce the dominance of the dollar.
In a meeting with African presidents, Ruto called on the leaders to embrace local currencies while doing business with each other.
“Why are we bringing dollars in the middle of our trade, this is the question we should be asking ourselves, and in the process, all our businesses are stranded, Egypt cannot pay for our tea because they are looking for dollars, we cannot pay for their sugar because we are looking for dollar," Ruto said during the second edition African Continental Free Trade Area Meeting in June.
“I have spoken with President Oramah of the African Export/Import Bank and they have built a mechanism where all our traders can trade in local currency, we do not have to look for dollars," the head of state added.