How blockchain adoption for payments will aid AfCFTA goals

At a time when cross-border trading is high on the agenda with the African Continental Free Trade Area (AfCFTA) agreement, the Chief Technical Officer of Digital Encode Limited, Dr. Oluseyi Akindeinde, believes that the adoption of blockchain for payments will fast-track the achievement of the trade agreement’s objectives.

Highlighting the advantages of the blockchain for payment at Africa Tech Alliance Forum (AfriTECH2021) held in Lagos, Akindeinde said that it reduces the risk of corruption and transaction costs.

The CTO of Digital Encode, an information security management, and compliance advisory company, cited an example of Pan African Payment & Settlement System (PAPSS) as expected to facilitate the expected increased volumes in cross-border payments across the continent.

He explained that blockchain enables peer-to-peer payments without an intermediary (either a bank or a clearinghouse).

Akindeinde noted that the technology would also lead to increase in instant payments, saying, “With it, participants will no longer need to convert local currencies into hard currencies which then entailed the funds leaving Africa to be converted before being sent back again to the beneficiary bank – adding days to the transaction time.

Speaking about the current mode of payment system for financing cross border trade, he said Africa’s central banks have to work in collaboration with the PAPSS to provide a payment and settlement service to which commercial banks, payment service providers and fintechs across the region can connect as ‘Participants’.