Ethiopia Joins Pan-African Payment System to Cut Cross-Border Transfer Costs

Ethiopia has joined the Pan-African Payment and Settlement System, the National Bank of Ethiopia and PAPSS announced on 15 October in Addis Ababa, a move that will let Ethiopian financial institutions settle cross-border transactions with counterparts across the continent in local currencies.

The announcement, made at the Ethiopia Finance Forum by central bank governor Eyob Tekalign and PAPSS chief executive Mike Ogbalu III, connects Africa's second-most-populous country to a network built to reduce the cost, delay and dollar dependence of intra-African payments.

How the system changes the plumbing

Cross-border payments within Africa have long been routed through correspondent banks outside the continent, requiring conversion into an intermediary currency such as the US dollar or euro. PAPSS, developed under the auspices of Afreximbank, the African Union and the AfCFTA Secretariat, lets a buyer pay in their national currency while the recipient receives funds in theirs, with settlement handled between central banks.

PAPSS has previously said its average settlement time is around seven seconds, against payment windows that can stretch for days through traditional corridors. The platform operates continuously, and participants have cited potential cost reductions of more than 90% relative to legacy routes, though realised savings depend on each country's implementation.

A network that has grown quickly in 2026

Ethiopia follows the Democratic Republic of Congo's central bank, which joined in September, and the Bank of Central African States, which connected the six CEMAC countries earlier in the year. When PAPSS last detailed its network in September, it reported coverage of more than 30 African countries, 24 national and regional central banks, over 200 commercial banks and payment service providers, and 16 switches, with transaction volumes up roughly 1,000% year on year.

For Addis Ababa, membership also carries a diplomatic dividend. Ethiopia will host PAPSS COWRY 2026, the network's payments conference, on 26 and 27 November under the theme "Scaling Africa's Sovereign Payments: From Continental Connectivity to Global Integration".

What it means for Ethiopian business

Ethiopian exporters, logistics firms and digital-service providers gain a route to invoice and be paid in birr without the friction of correspondent banking. Importers face the mirror-image benefit. For a country managing exchange-rate reforms and foreign-exchange scarcity, reducing the dollar requirement for regional trade is a practical hedge.

Mobile-money operators and payment-service providers are preparing their own integration through EthSwitch, Ethiopia's national switch, subject to a letter of no objection from the central bank. That step would extend cross-border reach beyond banks to the wallets used by a large share of the population.

The remaining test

Joining the network is not the same as using it. Commercial volumes depend on banks completing technical onboarding, agreeing currency-conversion terms and steering real trade flows through the new rails. The November conference will preview PAPSS's next phase, which shifts emphasis from building connectivity to driving adoption — the metric that will decide whether Ethiopia's membership changes payments in practice or only on paper.