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Daniel Adaji
The Central Bank of Nigeria (CBN) has ordered all Money Deposit Banks (DMBs) in the country to immediately adopt the Pan-African Payment and Settlement System (PAPSS) for originating cross-border transactions, marking a major step toward improving intra-African trade and payment efficiency.
In a circular issued on Monday and referenced TED/FEM/PUB/FPC/001/006, the apex bank outlined new guidelines aimed at boosting the participation of financial institutions, businesses, and individuals in the continental payment network.
“This directive follows the CBN’s recent announcement of a significant review of documentation requirements for PAPSS transactions in Nigeria,” said Sidi Ali, the CBN’s Acting Director of Corporate Communication.
PAPSS, launched in January 2022 by Afreximbank in collaboration with the African Union and the AfCFTA Secretariat, is a centralized payment infrastructure designed to facilitate instant, secure, and seamless transactions across African countries.
The system allows participants to make payments in their local currencies, eliminating the heavy reliance on third-party currencies like the U.S. dollar and cutting down transaction costs and processing time.
The CBN’s new policy simplifies documentation for low-value transactions. Individuals transacting up to $2,000 (or its naira equivalent), and companies handling up to $5,000, can now use existing Know Your Customer (KYC) and Anti-Money Laundering (AML) documents already submitted to their Authorized Dealer Banks (ADBs).
For transactions exceeding these amounts, all current documentation requirements, as detailed in the CBN Foreign Exchange Manual, will still apply.
Further, the circular instructs that all export proceeds repatriated through PAPSS must be certified by the processing banks to ensure compliance with Nigeria’s export regulations. Applicants are also responsible for presenting all necessary regulatory documents to appropriate government agencies for goods clearance.
As part of its effort to encourage market-driven foreign exchange sourcing, the CBN now permits Authorized Dealer Banks to obtain foreign exchange for PAPSS transactions through the Nigerian Foreign Exchange Market—without needing direct access to CBN forex reserves.
“The initiative will enhance financial inclusion and operational efficiency,” the apex bank noted, urging exporters, importers, and individuals to familiarise themselves with the updated process and take advantage of the PAPSS platform for cross-border transactions.
This policy shift aligns with Nigeria’s commitment to the African Continental Free Trade Area (AfCFTA) agenda, aiming to promote regional economic integration.