The Central Bank of Nigeria (CBN) has instructed financial institutions across the country to fully integrate the Pan-African Payment and Settlement System (PAPSS) into their transaction processes. The move is part of a broader strategy to enhance intra-African trade and improve cross-border payment efficiency.
According to a statement issued on Monday by Mrs Hakama Sidi Ali, the CBN’s Acting Director of Corporate Communications, this development follows a recent review of the documentation procedures required for PAPSS transactions in Nigeria. PAPSS, which was launched in January 2022 by Afreximbank in collaboration with the African Union and the African Continental Free Trade Area (AfCFTA) Secretariat, is designed to simplify and speed up payments across African countries.
The system allows businesses and individuals to make transactions in their local currencies. By doing so, it cuts down the dependency on external currencies such as the U.S. dollar, lowers transaction costs, and supports the goals of the AfCFTA agreement. The CBN believes the adoption of PAPSS will also strengthen financial inclusion and operational efficiency within the continent.
Simpler Transactions for Lower Amounts
One of the key updates to the policy is the simplification of requirements for low-value transactions. Individuals sending up to $2,000 or its naira equivalent, and businesses transacting up to $5,000, can now rely on basic Know Your Customer (KYC) and Anti-Money Laundering (AML) documents already submitted to their banks. For transactions exceeding these limits, the CBN clarified that all standard documentation rules as outlined in the Foreign Exchange Manual and other circulars still apply.
The apex bank also made it clear that applicants are responsible for providing all necessary regulatory documents to government agencies when clearing goods. In an additional move to encourage market-based forex sourcing, the CBN authorised banks to obtain foreign exchange for PAPSS settlements directly from the Nigerian Foreign Exchange Market without needing to approach the CBN.
Furthermore, banks processing export proceeds repatriated through PAPSS must certify these transactions to ensure they align with current export regulations. The central bank encouraged exporters, importers, and everyday users to get familiar with the new guidelines and tap into PAPSS for smoother, faster transactions across Africa.
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3 replies on “CBN Pushes Banks Towards New Cross-Border Payment Era”
The integration of PAPSS by the Central Bank of Nigeria is a significant step towards boosting intra-African trade. Simplifying the requirements for low-value transactions will greatly benefit individuals and small businesses. The authorization for banks to source forex directly from the Nigerian Foreign Exchange Market is a commendable move. It’s encouraging to see efforts being made to ensure smoother and faster cross-border payments. How will these changes impact the overall efficiency of cross-border trade in Africa?
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