Kenya's quest to host Africa's payments system takes longer

The new payment platform was formally launched in January last year. It is a centralised payment and settlement system for intra-African trade in goods and services.

According to Afreximbank President Benedict Oramah, the innovative system has the potential to save businesses in Africa $5 billion (Sh755 billion) in transaction costs annually, if fully embraced.

The key to these savings lies in the elimination of the need for traders and investors to convert their respective currencies into the US dollar, which in turn reduces the strain on local currencies.

This is particularly significant given the challenges faced in obtaining US currency locally due to the recent depreciation of the shilling.

Kenyan businesses across various sectors have expressed their frustration in accessing sufficient amounts of dollars, resulting in delays in making payments to overseas suppliers. In response to these concerns, President Ruto has pledged to address the dollar crisis.

Some Kenyan traders have even been forced to downsize their operations due to the inability to reliably source enough dollars.

Currently, when a buyer in Kenya wishes to purchase goods from a seller in Uganda, he or she is required to pay in a third currency from outside the continent, such as the US dollar, Euro or British pound.

However, the new system aims to facilitate instant payments, eliminating the need for traders in Kenya and other regional countries to convert their local currencies into hard currencies.

This development is set to streamline and simplify trade transactions within Africa. Central Bank of Kenya (CBK) Governor Kamau Thugge says the new system is timely and could help alleviate the foreign exchange currency shortage.

He stated that the platform would enable Kenyan traders to tap into opportunities from the African Continental Free Trade Area (AfCFTA).

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