Ethiopia joins PAPSS: Central bank enters Africa's local-currency payments networkEthiopia joins PAPSS: Central bank enters Africa's local-currency payments network
Key Highlights
- Ethiopia's central bank has joined the Pan-African Payment and Settlement System, which the platform announced on 15 October 2026, extending a network built to settle cross-border trade in local currencies.
- PAPSS began in January 2022 with 10 commercial banks and now links more than 150 banks across over 15 countries, including Nigeria, Zambia, Malawi, Kenya and Tunisia.
- South Africa remains outside the network, which leaves a gap in a system designed to cut dollar dependence and correspondent-bank costs in intra-African trade.
The National Bank of Ethiopia has joined the Pan-African Payment and Settlement System (PAPSS), the platform announced on 15 October 2026, giving the continental payments network a new anchor in the Horn of Africa.
The move matters for traders because PAPSS lets businesses settle in local currencies without routing money through the dollar or correspondent banks abroad. For Kenyan exporters and importers dealing with Ethiopia, that could mean cheaper and faster settlement in shillings and birr, although banks must first switch the service on.
What PAPSS does
According to PAPSS, the system lets parties transact directly in local currencies, with the aim of boosting trade and cutting cross-border payment costs. It supports the African Continental Free Trade Area by giving traders a payment channel that does not depend on foreign banks.
The network launched in January 2022 with 10 commercial banks. It now operates in more than 15 countries and has more than 150 commercial banks, among them institutions in Nigeria, Zambia, Malawi, Kenya and Tunisia. South Africa is not part of the network.
Reuters reported that the bank's governor, Eyob Tekalign, described Ethiopia's integration as "an important step in our continued efforts" towards wider financial integration.
Why Ethiopia matters for Kenya
Ethiopia is a neighbour and a growing partner in regional trade and infrastructure. As Mwenendo earlier reported, Ethiopia has expressed interest in a stake in the planned Lamu refinery, a sign of deepening commercial ties with Kenya.
Mwenendo earlier reported on how Sidama Bank joined the Ethiopia Securities Exchange, part of a wider push to modernise Ethiopia's financial markets. Central bank membership of PAPSS adds the payments side of that picture.
What remains unclear
The announcement does not say when Ethiopian commercial banks will begin processing payments through the system, or which currency pairs will be available first. Those details will decide whether Kenyan traders see a practical change in the coming months.
The absence of South Africa, the continent's most industrialised economy, also limits how far the network can replace dollar settlement across Africa. Mwenendo will report on the rollout once Ethiopian banks confirm a start date.
In Summary
- Who joined PAPSS?
- The National Bank of Ethiopia, Ethiopia's central bank.
- What is PAPSS?
- A continental platform that lets parties settle cross-border payments directly in local currencies.
- When was it announced?
- 15 October 2026.
- Where does the network operate?
- In more than 15 countries, including Nigeria, Zambia, Malawi, Kenya and Tunisia; South Africa is not a member.
- Why does it matter?
- It aims to cut payment costs and reduce reliance on the dollar and foreign correspondent banks.
- How big is the network?
- It began with 10 commercial banks in January 2022 and now has more than 150.