CBN Orders Banks to Adopt PAPSS for Cross-Border Transactions, Targets Boost in Intra-African Trade

In a brave step aimed at improving cross-border payment efficiency and deepening regional trade integration, the Central Bank of Nigeria (CBN) has appointed all banks operating within the country to start using the Pan-African Payment and Settlement System (PAPSS) for originally transactions.

The directive, which occurred through a circular issued on April 28, 2025, marks a significant transfer to Nigeria's approach to facilitate payments throughout the African boundaries. It came amid efforts to fully align the Nigerian banking system at the African Continental Free Trade Area (AFCFTA) initiative.

According to the Apex Bank, the decision complies with a recent outline of the documentation framework that manages the Papss transactions in Nigeria. New policies are designed to streamline participation for financial institutions, corporate exporters, and importers, as well as individuals, to maximize the benefits of intra-Africa's commerce.

The statement, signed by the CBN acting director of Corporate Communications, Mrs. Hakama Sidi Ali, emphasizes the bank's intent to promote inclusive financial systems while reducing the country's hope for US dollars for regional trade communities.

Simplified requirements for low -value transactions

Under the modified policy, CBN has introduced a major change that simplifies the documentation for low -value transactions. Individuals running up to $ 2,000-or the equivalent of Naira-can rely on documents that your customer (KYC) knows and anti-money laundering (AML) documents on their banks. The same applies to corporate entities that engage in transactions up to $ 5,000.

For higher value deals, however, the entire documentation as set in the CBN foreign exchange manual remains mandatory. The bank has reiterated that exporters and imports are only responsible for ensuring regulatory documents are submitted to relevant government agencies during commodity clearance.

In one step pointing to the more liberalization of the forex market, CBN also granted the permission of the businessman's resource banks to foreign exchanges for paps repair directly from the Nigerian Foreign Exchange market, which eliminated the demand for CBN intervention.

The circular clarified that all exports proceeds that are exported through the paps should be certified by the bank processing. This is to ensure compliance with Nigerian export laws and prevent abuse of the new framework.

Banks have been ordered to upgrade their internal infrastructure to accommodate Papss transactions, while businesses and individuals are encouraged to become familiar with updated documentation policies and take advantage of Paps' opportunity offers.

A system built for trade in Africa

Launched in January 2022 by Afreximbank in collaboration with the African Union and AFCFTA Secretariat, the Paps were designed to deal with one of Africa's largest bottlenecks: ineffective and expensive cross-border payment systems that exceeded third-party currencies such as the US dollar or the Euro.

Papss eliminates conversion delays, lowers transaction costs, and increases liquidity within African trade corridors by enabling instant regulating local currencies. For Nigeria, which remains one of African's largest economies, the adoption of the paps is expected to create new ways for expanding the trade, especially the West African neighbors.

The system also allows the settlement of real-time payment to participating countries, strengthening the trust of trading partners and reducing administrative burden associated with money exchanges.

Implications for trading position in the Nigeria region

The latest directive from CBN sends a strong signal of Nigeria's promise to the AFCFTA agenda. It represents a decisive effort to organize trade infrastructure with continental goals and to shift Nigeria's trade dependence far from global currency towards a longer regional ecosy system.

For Nigerian banks, the immediate task is to operate papss, adapt to new compliance requirements, and educate customers how to take advantage of the platform. This can mean revamping the internal compliance systems and increasing awareness to corporate clients.

Exporters and imports stand to get the most, especially small and medium-sized businesses that often struggle with access to foreign exchanges and the costs associated with cross-border transactions. In the Paps, they can now trade with Naira as their trading partners receive payment to their local currency – eliminating the demand for the US or Euro dollar as mediators.

While new policies may take some time to be embedded throughout the banking sector, the long-term benefits for the economy are clear: faster transaction times, lower cost, and deeper trade relationships with African counterparts.

Against Nigerian forex deficiencies and external pressures in its reserves, financial experts believe that paps can offer a strategic solution to reduce economic dollar dependence and improve financial sovereignty.