The Securities and Exchange Commission has said that the Pan-African Payment Settlement System would promote intra-African commerce and aid in the diversification of the capital market.
According to Nairametrics, the head of the SEC’s Office of the Chief Economist, Dr. Okey Umeano, said this in an interview.
A Memorandum of Understanding was recently signed between the Nigerian Exchange and the Pan-African Payment Settlement System to promote cross-border payments among African capital markets.
“This agreement starts to put into practice something about which we have been quite enthusiastic. African trade is made simple by PAPSS. We have always sought it because it increases the effectiveness of intra-African trade. It was initially designed to be used only for routine daily business, but we have always wanted it to be used for the capital market because we believe that if we can connect the exchanges and markets throughout the continent, everyone will have access to a wider range of opportunities.
“The West African Capital Market Integration Project and the African Exchanges Linkage Project are the two initiatives we are working on, however the issue we have always faced is how to settle and make payments. Do I need to exchange my naira for dollars, then convert those dollars back to cedis, and so on, in order to purchase a Ghanaian stock? These are the issues, but we can solve them by using PAPSS to streamline and improve deals.
“We are grateful to Afrexim Bank for enabling us to transact in naira and receive payment in local currency from anybody in Ghana or anywhere in Africa.”
According to Umeano, the MoU enables NGX to continue to support the Ghana stock exchange with the hope that other market players will key in and make use of the opportunity.
According to him, given the status of the markets, its adoption will increase options for diversification and improve the performance of the markets.
“With the state of the markets, the prospect for diversification is improved. It raises the bar for every opportunity.
According to Umeano, in the integration project that is currently under way, the SEC and other regulators are encouraging issuers to have access to markets that are different from the market of the primary issue because this will encourage them to issue more when issuers know that their issues have a higher chance of success because they have a larger market to sell into.
“This is crucial because if there is a problem in Nigeria, anyone in Africa can participate in it using their local currency. I consider this to be a really significant issue because the primary side of the market has not been doing well for a long time. Many problems have been observed throughout the continent.”
He concluded by saying that the regulators are in support of the initiative and are making efforts to harmonize regulations to support these laudable developments.
