Beyond borders: How CIPS and PAPSS can power Ghana’s next chapter of trade

Every exporter or importer who has experienced delayed payment or witnessed a margin erode due to currency conversion knows the truth that policy documents rarely highlight: trade issues primarily stem from payment delays. Despite goods moving freely across Africa, the money behind them can take a week and three intermediaries to arrive, rendering this freedom insignificant.

Ghana's upcoming trade growth phase heavily depends on resolving this often-overlooked problem, and two systems with unassuming acronyms—CIPS and PAPSS—deserve more attention from businesses. The cost of cross-border trade Traditionally, Ghanaian businesses engaged in international trade relied on correspondent banking networks, a sequence of intermediary banks that route payments across currency systems, usually settling in US dollars regardless of the goods' origins.

Each link in this chain adds costs, time, and uncertainty. Payment clearing may take days, exchange rates can fluctuate adversely during transactions, and fund visibility is often poor. While large corporations with treasury teams can manage this friction, small and medium enterprises (SMEs)—which form the backbone of Ghana's export base but lack resources to hedge currency risks or absorb delayed settlements—often face losing contracts to competitors with faster, cheaper payment methods.

Intra-African trade has suffered the same issues. Even between neighboring countries, payments have frequently required currency conversions and external correspondent banks, adding costs to transactions that should, in theory, be straightforward. Two systems, distinct roles PAPSS, the Pan-African Payment and Settlement System, and CIPS, China's Cross-Border Interbank Payment System, each address different aspects of this challenge.

PAPSS enables businesses to settle payments directly in local currencies across participating African markets, eliminating the need for multiple conversions and reducing reliance on correspondent banks. This leads to lower costs, faster settlements, and greater certainty for businesses trading within the continent. CIPS functions differently, offering Ghanaian businesses a more direct channel for Renminbi-denominated transactions with China, Ghana's largest trading partner.

Fewer intermediary steps mean fewer failure points and faster, cheaper settlements for transactions with Chinese counterparts. Used together, these two systems complement each other, strengthening Ghana's position within Africa and its connection to Asia, providing businesses with a more resilient, diversified method of moving money that aligns with their trading patterns.

Translating policy into practice The African Continental Free Trade Area (AfCFTA) promises a single market of over a billion people, but this vision only works if payments move as freely as goods. PAPSS provides the infrastructure to turn this promise into reality, and its public launch in Accra, coupled with Ghana's role as host of the AfCFTA Secretariat, places the country at the heart of this transformation rather than on its edges.

SMEs stand to benefit the most from these improved payment systems. For smaller importers and exporters, payment costs consume a disproportionate portion of each transaction, and delayed settlements can tie up essential working capital that businesses cannot afford to lose. Faster, cheaper, and more transparent payment systems give these businesses the opportunity to compete in previously inaccessible markets, whether it's sourcing raw materials for manufacturing, reaching new export destinations, settling with international partners for mining operations, or delivering digital services across borders.

Where improvements are still required These advancements require effort beyond technology infrastructure. Businesses must recognize payment infrastructure as a strategic growth lever instead of a mere back-office banking function. This necessitates boards and management teams to prioritize payment systems, enhance treasury capabilities, and promote digital literacy across the business community.

Regulators, banks, fintechs, and trade bodies must also collaborate to bridge this knowledge gap, with banks bearing particular responsibility: educating clients, facilitating onboarding, structuring trade finance, and assisting businesses in navigating the compliance and foreign exchange requirements associated with new payment channels.

Ensuring seamless integration of these systems, alongside continuous vigilance on cybersecurity and anti-money laundering compliance, will determine the smooth scaling of this infrastructure. Ghana’s upcoming chapter Ghana currently holds a strategically advantageous position: it serves as the AfCFTA Secretariat, an early adopter of PAPSS, and one of the African markets utilizing the CIPS rail.

If Ghana continues developing this payment infrastructure with the same dedication it has shown so far, the destination is a Ghana that trades more competitively across Africa, settles more efficiently with Asia, and attracts the kind of regional treasury and headquarters functions that come with genuine financial hub status. While trade agreements open the doors, payment systems are what enable businesses to walk through them.

Ghana possesses an opportunity that most countries on the continent do not yet have, and the upcoming task is ensuring its businesses are prepared to utilize it effectively. - By Kate Agamah, Head, Transaction Banking, Corporate and Investment Banking, Stanbic Bank Ghana.