CBN revises PAPSS transaction guidelines to strengthen intra-African trade

DDM News

The Central Bank of Nigeria (CBN) has announced new documentation rules for transactions conducted through the Pan-African Payment and Settlement System (PAPSS).

Diaspora digital media (DDM) revealed that this development forms part of efforts to deepen intra-African trade, promote financial inclusion, and enhance cross-border payment efficiency for Nigerians.

The announcement was made in a statement issued by Mrs. Hakama Sidi Ali, the Acting Director of Corporate Communications at the CBN.

According to the apex bank, the new guidelines are effective immediately and aim to remove obstacles to smooth international commerce within Africa.

The revised framework grants Authorized Dealer Banks (ADBs) the autonomy to source foreign exchange for PAPSS settlements through the Nigerian Foreign Exchange Market.

This means that ADBs no longer need to rely on the CBN for foreign exchange to complete PAPSS transactions.

The change is expected to boost flexibility, speed, and reliability for cross-border business dealings conducted by Nigerians.

PAPSS was launched in January 2022 by the African Export-Import Bank (Afreximbank) in partnership with the African Union and the African Continental Free Trade Area (AfCFTA) Secretariat.

The system was developed to solve a major challenge that African traders faced: the costly and time-consuming process of converting local currencies into foreign currencies, typically US dollars or euros.

Before PAPSS, many intra-African transactions required conversion into foreign currencies and routing through banks outside the continent.

This resulted in higher transaction costs, longer processing times, and exposure to foreign exchange volatility.

PAPSS enables participants to settle cross-border transactions instantly and securely in their local currencies without the need for third-party currencies.

This innovation is viewed as a critical component of the AfCFTA’s objective to create a single African market.

By reducing reliance on external financial systems, PAPSS strengthens the continent’s financial autonomy and supports economic growth.

In the circular referenced TED/FEM/PUB/FPC/001/006 dated April 28, 2025, the CBN detailed the new operational rules.

One key adjustment relates to documentation requirements for low-value transactions conducted via PAPSS.

Under the updated policy, individuals making transactions up to $2,000 can submit only basic Know Your Customer (KYC) and Anti-Money Laundering (AML) documents provided earlier to their banks.

Similarly, corporate entities transacting amounts up to the Naira equivalent of $5,000 will also benefit from this simplified documentation process.

This measure is expected to make cross-border transactions faster and more accessible for small businesses and individual users.

However, for transactions that exceed these thresholds, the standard documentation requirements stipulated in the CBN Foreign Exchange Manual and previous circulars will still apply.

Thus, higher-value transactions will continue to undergo thorough compliance checks to safeguard against risks.

Another important provision assigns responsibility to applicants to ensure the availability of all regulatory documents required for clearing goods.

This means that individuals and businesses must present necessary certifications demanded by relevant Nigerian government agencies.

Failure to do so could result in delays or denial of transaction approvals.

Additionally, the CBN stressed that all export proceeds repatriated via PAPSS must be properly certified by the processing banks.

This rule is intended to uphold transparency, ensure regulatory compliance, and prevent illicit financial flows.

Certification of export proceeds will enable better monitoring of foreign exchange inflows and support Nigeria’s economic data accuracy.

The CBN encouraged all banks operating in Nigeria to embrace PAPSS and begin originating transactions based on the new policy framework.

It also called on exporters, importers, and individuals engaged in cross-border activities to familiarize themselves with the updated requirements.

By doing so, stakeholders can maximize the benefits of faster, cheaper, and more secure payment processes offered by PAPSS.

The Central Bank believes that the new documentation regime will lower barriers for traders and entrepreneurs across Africa.

In turn, this should stimulate increased trade volumes and enhance Nigeria’s competitiveness within the African Continental Free Trade Area.

Prior to this revision, documentation hurdles were frequently cited as a reason for low adoption of PAPSS among Nigerian businesses.

The CBN’s intervention now signals a renewed push to drive PAPSS adoption and strengthen Nigeria’s leadership in African trade.

Experts believe that wider use of PAPSS will help conserve foreign exchange reserves by reducing the need for dollar-based settlements.

It is also expected to reduce transaction costs significantly, an outcome that will benefit small and medium-sized enterprises (SMEs) in particular.

Furthermore, PAPSS promotes greater financial inclusion by enabling more participants, including those in remote areas, to engage in international commerce.

The Central Bank’s latest move aligns with broader continental efforts to boost intra-African trade from its current level of around 15 percent to higher targets set by the AfCFTA.

Currently, African countries trade far more with Europe, Asia, and North America than they do with one another.

The success of initiatives like PAPSS could change this dynamic dramatically over the next decade.

The CBN has advised all stakeholders to access the full details of the new guidelines through the official circular available at www.cbn.gov.ng.

It reaffirmed its commitment to supporting platforms and initiatives that empower Nigerians to participate fully and competitively in the global economy.

With this policy revision, the Central Bank is taking a decisive step toward a future of stronger regional economic integration and financial resilience.

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