In a move aimed at boosting regional trade and financial integration, the Central Bank of Nigeria (CBN) has issued fresh directives regarding the implementation and operations of the Pan-African Payment and Settlement System (PAPSS). The announcement, which was made public through an official circular, outlines new procedures and compliance standards designed to streamline cross-border transactions and enhance the efficiency of the payment system within the West African Monetary Zone (WAMZ).

PAPSS is a central payment and settlement infrastructure for intra-African trade and commerce payments. It was developed by the African Export-Import Bank (Afreximbank) in collaboration with the African Union and the West African Monetary Institute (WAMI). The system is intended to facilitate instant and secure payments across African borders in local currencies, thereby reducing dependence on external currencies like the US dollar and euro for intra-African trade.

The Central Bank of Nigeria, as one of the active participants in the initiative, has taken a proactive step to bolster the adoption and efficiency of PAPSS among Nigerian financial institutions. According to the new directive, all authorized dealers, financial service providers, and relevant stakeholders must fully comply with updated procedures for onboarding, transaction processing, and reporting requirements under PAPSS.

In the circular issued by the CBN’s Director of Trade and Exchange, Dr. Hassan Mahmud, the apex bank emphasized the importance of PAPSS in supporting the objectives of the African Continental Free Trade Area (AfCFTA). The directive underscores the bank’s commitment to ensuring seamless implementation of PAPSS in Nigeria, with the goal of facilitating easier and faster cross-border payments among West African nations.

The key elements of the new directive include:

1. Mandatory Onboarding: All authorized dealers are required to ensure that their systems are integrated with the PAPSS platform. Banks and other financial institutions must complete onboarding procedures within a stipulated timeframe, which the CBN noted is critical for achieving full operational status.

2. Transaction Monitoring and Reporting: Institutions must implement robust monitoring systems to track PAPSS transactions in real-time. Daily and weekly reports are to be submitted to the CBN to enhance transparency and allow for effective oversight.

3. Foreign Exchange Guidelines: In line with its efforts to stabilize the foreign exchange market, the CBN clarified that PAPSS transactions should primarily be conducted in local currencies. The use of third-party currencies is discouraged unless explicitly authorized by the CBN.

4. Compliance Audits: Periodic audits will be conducted to assess the level of compliance among participating institutions. The CBN has indicated that non-compliance may attract sanctions, including temporary suspension from PAPSS participation or financial penalties.

5. Capacity Building: To ensure smooth implementation, the CBN announced that it will collaborate with WAMI and Afreximbank to conduct training programs and workshops for banks, fintech companies, and other stakeholders. These programs will focus on technical integration, risk management, and customer education.

The apex bank also reiterated its commitment to enhancing financial inclusion and promoting regional economic integration through digital innovation and policy support. Speaking on the broader implications of PAPSS, Dr. Mahmud stated that the system has the potential to drastically reduce the cost and time associated with cross-border payments.

“This initiative is a landmark in Africa’s journey toward economic unification. By leveraging technology and regional cooperation, PAPSS will enable Nigerian businesses—especially small and medium enterprises—to trade more easily across borders, using local currency and at lower cost,” he said.

Stakeholders in the financial and business sectors have welcomed the move, describing it as a necessary step in modernizing payment infrastructure and facilitating intra-African trade. Analysts believe that the proper implementation of PAPSS will significantly reduce the bottlenecks faced by exporters and importers in processing international transactions within Africa.

Financial experts have also highlighted the potential of PAPSS to strengthen the naira by reducing demand for foreign exchange in regional trade. By allowing Nigerian exporters to receive payments in naira for goods sold to other African countries, the system could relieve some of the pressure on the forex market.

However, industry observers also caution that the success of PAPSS will depend on strong institutional collaboration, political will, and consistent regulatory oversight. The CBN’s directive is therefore seen as a critical milestone in ensuring the long-term viability and scalability of the system.

As Nigeria continues to champion digital financial innovation, the PAPSS platform offers a promising framework for driving inclusive growth and regional integration. The CBN’s renewed commitment marks a significant step toward a more connected and self-sustaining African economy.