According to the African Export-Import Bank (Afreximbank), the partnership is expected to boost cross-border payments and strengthen the regulatory framework for intra-African trade.

Highlighting PAPSS’s achievements since launch, Mike Ogbalu, chief executive officer of PAPSS, said:

“So far, PAPSS has reduced intra-Africa cross-border transaction costs among participating countries and enabled savings of up to 27% for end users, while helping banks experience transaction volume surges of over 100% through digital channels integration. As our network grows, we are making African payments faster, more affordable, and accessible, catalysing economic growth and unlocking new opportunities for businesses and communities across Africa.”

Mohammed Benbahane, deputy governor of the Bank of Algeria, said the central bank joined PAPSS to improve payment efficiency and facilitate intra-African trade. He noted that the move will strengthen Algeria’s role in the continent’s financial ecosystem and support sustainable development in Africa.

PAPSS, launched by Afreximbank in collaboration with the African Union Commission (AUC), is a centralised platform that enables secure and seamless money transfers across African countries, reducing risks and enhancing financial integration across Africa.

It works with African central banks to provide payment systems that commercial banks and licensed payment providers can connect to, enabling people across the continent to access these services.

Trust and security are foundational to financial services, and as cybercriminals continue to become more aggressive and sophisticated, addressing any vulnerabilities is key to safeguarding the integrity of Africa’s digital financial ecosystem.

In fact, Africa experienced the highest average number of cyberattacks per week per organisation in 2023 with a 23% increase compared to the previous year.

Africa’s digital financial ecosystem is still maturing, and as digital payments become more integrated across countries, regions, and more interoperable across payment platforms, this increasingly complex environment can introduce new cybersecurity vulnerabilities.

And, as in an interconnected landscape a single weak link can jeopardise the entire network, it is critical that the continent’s financial institutions, governments and decision-makers come together to collectively work towards establishing and maintaining baseline security standards across the industry.

This requires building meaningful partnerships with relevant stakeholders, substantial investment and greater harmonisation of regulations and policies across the continent.

The imperative for investment and standardised regulations

Several challenges hinder the attainment of robust cybersecurity in Africa. One of the primary issues is the lag in regulatory frameworks, while a lack of significant investment in security would lead to vulnerabilities within the continent’s financial sector being exploited.

Fortunately, investment in cybersecurity has seen a notable increase over the past five years, reflecting a growing recognition of its importance.

The rise of artificial intelligence (AI) and sophisticated cyber threats has driven firms to allocate more resources towards cybersecurity. And digital payment networks like Onafriq have strengthened their security posture by investing in intelligent tools that predict and proactively address potential threats.

Despite these advancements, there remains a disparity in investment levels across the continent. Ensuring that all financial institutions can meet necessary security standards requires coordinated efforts and substantial capital.

This includes investing in state-of-the-art technology and continuous monitoring systems to detect and prevent malicious activities.

Additionally, regulators play a crucial role in setting and enforcing security standards. And yet the pace of regulatory development often falls behind the speed of innovation in the fintech space.

Harmonising regulations across different African countries is essential to create a consistent and secure environment for digital payments by adopting best practices and global standards.

This is necessary to avoid fragmentation of the digital payments landscape while effective enforcement of these standards is vital to maintaining a secure financial ecosystem.

A need for cybersecurity skills and a security first culture

A truly secure payments environment requires buy-in from every part of the ecosystem’s value chain, including the end user.

Not only must financial institutions adopt a security-first approach, embedding robust security measures into every aspect of their operations, but educating users about security practices is just as crucial.

As digital payments become more prevalent, financial institutions must design products with built-in security features and continuously educate users on safe practices.

This includes secure PIN usage, recognizing phishing attempts, and safeguarding personal information.

For example, Onafriq exemplifies this approach by ensuring that security is a priority from the design stage.

By securing networks, protecting sensitive data, and conducting regular third-party audits, we have been able to maintain a strong security record.

This proactive stance is essential for preventing breaches and ensuring customer trust.

More than this, there is a growing need to build the cybersecurity capacity needed to sustain the digital payments landscape.

Africa faces a shortage of skilled cybersecurity professionals, which hampers the ability to address emerging threats effectively.

In fact, a cybersecurity assessment conducted by the African Union Commission and the United Nations Development Programme found that African countries had a cybersecurity competence of 0.21 out of 1 with more than 70% of African nations requiring additional cybersecurity infrastructure.

Financial institutions and governments must invest in training programs, internships, and continuous education to develop a skilled workforce capable of managing cybersecurity challenges.

But, retaining talent within Africa also remains a significant issue. Many trained professionals seek opportunities abroad, exacerbating the skills gap.

Addressing this requires creating conducive environments that offer competitive opportunities and career growth within the continent.

Cybersecurity is a cornerstone of Africa’s digital payments landscape. To achieve a secure and resilient financial sector, Africa must invest in robust cybersecurity infrastructure, foster regulatory harmonisation, and prioritise collaborative efforts among financial institutions.

By addressing these challenges, Africa can build a secure digital payments ecosystem that supports economic growth and instils trust among users.

The AUC Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, Ambassador Albert M. Muchanga, and the African Development Bank’s Deputy Director General for the East Africa Region, Abul B. Kamara, signed the agreement on behalf of their institutions.

The African Development Bank’s board of directors approved the grant of 7 million Units of Account ($ 9.73 million) in September this year. The project supports the AUC’s implementation of digital economy projects to enhance a continental single digital market. It also supports the implementation of the African Continental Free Trade Area and the Digital Transformation Strategy for Africa.

The project comes as the backdrop of the Covid-19-induced recession that exposed several gaps in the African digital economy ecosystem. It addresses these gaps.

Phase 1 runs from 2023 to 2026. It will focus on three main components namely: digital enablers; digital trade and e-commerce adoption; and support actions. Specifically, the project will help strengthen the frameworks (strategic, policy, regulatory and conceptual) and cross-cutting (gender, climate change and resilience) dimensions for the development of Africa’s digital economy.

These frameworks are key substrate to guide the establishment of a single digital market across the African continent by 2030. The project will therefore contribute to the implementation of digital enablers—universal access to broadband infrastructure, sovereign African cloud, African digital market, etc.—e-commerce and digital trade promotion programs for medium, small and micro enterprises and start-ups. It will also help to create a conducive ecosystem for digital trust, skills and African experts’ networks.

Ambassador Muchanga expressed the AUC’s gratitude to the African Development Bank for its support. He said: “The Covid-19 pandemic underscored the importance of digital technologies and the digital economy as a whole, and in that regard, Africa should think big when it comes to digital development, digital economy and the grand opportunities on integration and economic growth.”

Dr. Kamara said the project would support the implementation of the African Development Bank’s High 5 priorities as accelerators to achieve Agenda 2063 targets and the continent’s economic transformation to get The Africa We Want.

He added: “It is important to create employment opportunities for millions of young Africans, which is essential for the stability and prosperity of the continent. The digital transformation of economies offers new opportunities to increase intra-Africa trade and boost economic growth.”

Approval for the grant, from the Fund’s regional public goods window, came a few days ahead of the 35th Ordinary Session of the AU Assembly, which closed on Sunday in the Ethiopian capital Addis Ababa.

On the sidelines of the Assembly, President Akinwumi Adesina, African Development Bank, and Dr. Monique Nsanzabaganwa, African Union (AU) Commission Deputy Chair, met on Thursday, 3 February, to discuss the organization’s future and challenges. Nsanzabaganwa expressed the institution’s deep appreciation for the grant.

The grant will contribute to the Institutional Capacity Building for the African Union Project, a program designed to improve the AUC’s capacity to drive Agenda 2063.

Agenda 2063 is the African Union’s vision for “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena.”

It includes programs to boost Africa’s economic growth and development and lead to the rapid transformation of the continent.

In 2017, the AUC launched a comprehensive institutional reform process to make the institution more nimble, efficient and financially self-sufficient.

The project will continue those reforms through upgrading its systems, as well as improving planning, coordination, and service delivery capacities.

Nsanzabaganwa said the funds will cover three main components:  institutional strengthening; policy planning, coordination, and corporate service delivery; and project management.

In addition, it contains important environmental and social safeguards and gender-sensitive considerations.

A portion of the funds would be allocated to the AUC’s Disaster Risk Reduction practices, and Climate Change Adaptation mechanisms, while support for women will include developing the Commission’s Gender and Youth Mainstreaming Guidelines and Scorecard and related activities over and above the support towards the AU’s institutional reform.

The African Development Bank has been a long-term partner to the African Union’s development agenda, supporting programs such as its Development Agency-NEPAD program for infrastructure development in Africa.

It also supports the African Continental Free Trade Area secretariat, the Africa Centres for Disease Control and Prevention and the Climate for Development in Africa Program.

The total cost of the project is $12.6 million, including an in-kind counterpart contribution from the AU. Success of the project is expected to encourage similar contributions from other development institutions.