Tanzanian businesses face high costs in cross-border trade. The Pan-African Payment and Settlement System (PAPSS) offers a solution. This guide explains how entrepreneurs can use PAPSS to save on foreign exchange. PAPSS enables instant payments in local currencies across Africa. It reduces reliance on hard currencies like the US dollar. Tanzania joined PAPSS in 2023 through the Bank of Tanzania. This move supports the African Continental Free Trade Area. Businesses can now trade more efficiently with neighboring countries. Cross-border trade in East Africa reached $12 billion in 2023. Tanzania's exports to Africa grew by 8% last year. PAPSS aims to cut transaction costs by up to 50%. It also speeds up settlements from days to minutes. This system benefits small and medium enterprises. They often struggle with high banking fees. For example, a Tanzanian coffee exporter can pay a Kenyan supplier directly. They use Tanzanian shillings instead of converting to dollars. This saves on conversion fees and exchange rate risks. PAPSS is operated by the African Export-Import Bank. It partners with central banks across the continent. Tanzania's participation began after regulatory approvals. The Bank of Tanzania integrated PAPSS into its systems. This allows commercial banks to offer PAPSS services. Businesses must work with approved banks to access PAPSS. Steps to use PAPSS for cross-border trade. First, register with a PAPSS-enabled bank in Tanzania. Options include CRDB Bank, NMB Bank, and Stanbic Bank Tanzania. These banks have implemented the system since 2023. Second, complete know-your-customer requirements. This involves providing business registration documents. Third, initiate payments through your bank's platform. Specify the recipient's details in the partner country. PAPSS converts currencies at near-real-time rates. Transactions typically settle within 24 hours. Costs vary by bank but average 1-2% of transaction value. In Tanzanian shillings, fees might be TZS 10,000 to TZS 50,000 per transaction. That's about $4 to $20 USD. Compare this to traditional methods costing 3-5%. A $10,000 payment could save $200 to $400. PAPSS also reduces hidden charges from correspondent banks. Case study: A Tanzanian textile company exports to Uganda. They used PAPSS to pay for raw materials. The payment was in Tanzanian shillings. The Ugandan supplier received Uganda shillings. The transaction cost TZS 25,000 ($10) and settled in one day. Previously, it took three days and cost $50. This saved time and money. Another example: An investor importing goods from Ghana. They avoided dollar conversions and saved on forex spreads. PAPSS supports trade in goods and services. It covers sectors like agriculture, manufacturing, and retail. Requirements for using PAPSS. Businesses need a valid tax identification number. They must have a bank account in Tanzania. Compliance with anti-money laundering rules is essential. Companies should provide trade documents like invoices. PAPSS transactions require internet banking or mobile apps. Best practices for maximizing savings. Monitor exchange rates on PAPSS platforms. Plan payments during low-fee periods. Use bulk transactions to reduce per-unit costs. Train staff on PAPSS procedures. Work with banks that offer competitive rates. For instance, NMB Bank provides dedicated support for PAPSS users. Challenges and solutions. Some businesses face technical issues. Partner with banks that have robust digital systems. Limited awareness is another hurdle. Attend workshops by the Tanzania Trade Development Authority. PAPSS is expanding to more countries. Tanzania traders can now deal with Kenya, Uganda, Rwanda, and Ghana. Future plans include West and Southern Africa. This growth will open new markets. Statistics show PAPSS processed over $500 million in transactions in 2023. The African Development Bank projects $5 billion in annual savings by 2025. Tanzania's cross-border trade potential is huge. The government promotes PAPSS through the Ministry of Industry and Trade. They aim to increase intra-African trade from 15% to 25% by 2030. PAPSS is a key tool for this goal. Entrepreneurs should adopt it early. It enhances competitiveness in regional markets. Investors can use PAPSS for remittances and investments. Expats sending money to Tanzania might find it cheaper. The system supports economic integration. It aligns with Tanzania's Vision 2025 for development. Practical tips: Start with small transactions to test PAPSS. Consult with your bank for tailored advice. Keep records of all cross-border payments. Use PAPSS for recurring trade partners to build efficiency. The Bank of Tanzania offers guidelines on its website. They update information regularly. Businesses report average savings of 30% on forex costs. This boosts profitability. For example, a cashew nut exporter reduced expenses by TZS 1 million per month. That's about $400 USD. PAPSS also improves cash flow. Faster settlements mean quicker access to funds. This helps in managing working capital. In summary, PAPSS transforms cross-border trade for Tanzanians. It cuts costs, speeds up payments, and reduces forex risks. Entrepreneurs should integrate it into their trade strategies. Next steps: Contact a local bank to get started. Explore trade opportunities with PAPSS-enabled countries. Stay informed on system updates. ## FAQ What is PAPSS and how does it work? PAPSS is a system for instant cross-border payments in local African currencies. It connects banks across Africa to settle trades without using US dollars, reducing costs and time. Which Tanzanian banks support PAPSS? CRDB Bank, NMB Bank, and Stanbic Bank Tanzania currently offer PAPSS services. They have integrated the system for business and individual use since 2023. How much can I save with PAPSS? Businesses save 30-50% on transaction fees compared to traditional methods. For a $10,000 payment, savings could be $200-$400, plus faster settlement benefits. What documents are needed to use PAPSS? You need business registration, tax ID, and KYC documents from your bank. Trade invoices may be required for larger transactions to ensure compliance. Can PAPSS be used for all African countries? PAPSS is available in several countries, including Kenya, Uganda, Rwanda, and Ghana. Expansion is ongoing, so check with your bank for the latest list. How long do PAPSS transactions take? Payments typically settle within 24 hours, much faster than the 3-5 days for traditional bank transfers involving correspondent banks. Is PAPSS secure for large payments? Yes, PAPSS uses secure protocols approved by central banks. It includes encryption and fraud detection, making it reliable for significant trade amounts. PAPSS is a powerful tool for Tanzanian businesses engaged in cross-border trade. It offers substantial forex savings and efficiency gains. By adopting PAPSS, entrepreneurs can enhance their competitiveness in African markets. Start by consulting with a participating bank to explore how it fits your trade needs.