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President Ruto's quest to free Kenya and other African countries from the dominance of the US dollar and other foreign currencies in trade transactions has received regional backing with more countries saying the move is timely.
Uganda became the latest country to rally behind the President's call with it's Finance Minister Matia Kasaija endorsing the adoption of an African wide payment platform that undercuts the the US dollar.
My Kasaija echoed President Ruto's calls saying the new settlement platform will boost trade between countries like Kenya and Uganda and ease pressure on regional currencies amid the ongoing currency crisis.
"What are we waiting for," posed the minister while backing Kenya's calls.
Ruto has stepped up his calls for the adoption of a new payment system backed by pan African trade bank the Africa Import-Export Bank (Afreximbank) and the African Union (AU).
Africa currently has approximately 42 individual currencies.
The Pan African Payments Settlement System (Papps) was formally launched in January last year.
It is a centralized payment and settlement system for intra-African trade in goods and services.
The PAPSS allows companies in Africa to pay for intra-African trade transactions in their local currency.
"We are all struggling and all our businessmen are struggling and our traders are struggling to make payments for goods and services from one country to another because of differences in currencies," President Ruto said recently while addressing the African Private Sector Dialogue on the African Continental Free Trade Area in Nairobi.
"And in the middle of all these we are all subjected to a dollar environment. Kenyans want to pay for Tanzanian goods in Dollar, Tanzania want to pay for DRC goods in dollars.....Why are we bringing dollars in the middle of our trade. This is the question we should be asking ourselves," Ruto added.
The PAPSS was developed by the African Export-Import Bank in collaboration with the African Continental Free Trade Area (AfCFTA) Secretariat.
Afrexim Bank President Benedict Oramah who originated the platform says it will be a game changer for intra-African trade as it could save businesses across the continent $5 billion (Sh700 billion) in transactions costs each year if fully adopted.
"The Pan-African Payment and Settlement System is up and running. It will save the continent $5billion in intra-African transfer changes," says Prof Oramah.
"It will also expedite and enable payments for intra-African trade in African currencies."
The new system allows countries to trade with their own currencies seamlessly.
PAPSS is expected to reduce the costs, and accelerate the settlement and payment of, trade transactions.
African companies and their local banks use correspondent banks - often based outside of Africa - to settle payments between two African currencies in a third, external currency, usually dollars or Euros.
This system has created foreign exchange and liquidity pressures for individual African Central Banks.
By facilitating the settlement of payments, PAPSS aims to support increased African trade under the AfCFTA.
African Central Banks oversee the governance and daily operation of the PAPSS, which is headquartered in Cairo, Egypt.
PAPSS is only an exchange for legal tender, not digital assets like cryptocurrencies or Central Bank Digital Currencies.
Trade practices between African countries have long been subject to the supremacy of the US dollar.
Whether it's Kenyan traders doing business with Djibouti or other intra-continental transactions, the necessity for the US currency often becomes an unavoidable obstacle.
This shilling just like other regional currencies is facing currency pressure against the dollar.
It hit a record low against the dollar yesterday piling further pressure on Kenyans already dealing with a high cost of living crisis that has plunged many into poverty and fuelled political unrest.
The depreciating shilling now threatens to pile fresh pressure on fuel prices, which have stoked public anger.
Central Bank of Kenya (CBK) data shows the shilling exchanged at an average of 140.1206 yesterday, setting up the country for more expensive imports, electricity and debt servicing distress.
The continued weakening of the local currency is expected to push up living costs, hurting households already subjected to high fuel and food prices, experts said.
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