Ethiopia Joins PAPSS, Opening a Channel to Settle African Trade in African Currencies

Ethiopia has joined the Pan-African Payment & Settlement System (PAPSS), opening a channel for cross-border payments to be settled in African currencies.

Stated that plainly it sounds procedural. It is not. PAPSS exists to remove a step that costs African trade a great deal of money: the practice of settling a transaction between two African countries by converting one local currency into US dollars, moving the dollars through a correspondent bank outside the continent, and converting them again at the other end.

What comes off the cost of a trade

Every one of those steps has a price. Two currency conversions with a spread on each. Correspondent banking fees. A settlement cycle measured in days rather than hours, during which the exporter is financing the receivable. And, for Ethiopian importers and exporters specifically, a hard-currency requirement that has to be met from a foreign exchange allocation that is rationed.

That last point is why this matters more in Addis Abeba than it would in a country with a freely available dollar. An Ethiopian firm buying from Kenya or Nigeria has historically needed dollars to do it, which meant queuing for them. A settlement channel that clears birr against the counterparty currency directly does not create foreign exchange, but it reduces the number of transactions that need to consume any.

The firms positioned to notice first are those already trading regionally at moderate ticket sizes: agricultural exporters, manufacturers importing inputs from within Africa, logistics operators, and the payment and remittance businesses that sit on top of them.

Adoption is the variable, not membership

Joining a settlement system and having banks use it are different events. PAPSS works through participating commercial banks, and the practical questions are which Ethiopian banks connect, how quickly, at what fees, and whether the National Bank's foreign exchange rules are amended to recognise a PAPSS settlement as distinct from a hard currency one. Until those answers exist, membership is a capability rather than a cost saving.

Open

It has not been announced which Ethiopian banks will participate, when the channel becomes live for customers, what transaction limits apply, or how PAPSS settlements will be treated under existing foreign exchange directives.

Sources: Addis Fortune, 29 September 2026