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

In a daring step aimed at improving the efficiency of cross -border payments and deepening the integration of regional trade, the Nigeria Central Bank (CBN) has led all banks operating in the country to start the use of the Pan -African payment and settlement system (PAPS) for original transactions.

The directive, which entered into force by a circular published on April 28, 2025, marks a significant change in the approach of Nigeria to facilitate payments through African borders. It is in the midst of efforts to fully align the Nigeria banking system with the African initiative of the continental free trade area (AFCFTA).

According to Apex Bank, the decision follows a recent overhaul of the documentation framework governing PADS transactions in Nigeria. The new rules are designed to rationalize the participation of financial institutions, business exporters and importers, as well as individuals, in order to maximize the advantages of intra-African trade.

The declaration, signed by the interim director of communications for CBN companies, Ms. Hakama Sidi Ali, underlines the bank’s intention to promote inclusive financial systems while reducing the country’s dependence on the US dollar for regional trade regulations.

Simplified requirements for low -value transactions

Under the revised policy, the CBN has introduced a key change that simplifies documentation for low value transactions. Transgantic individuals up to $ 2,000 – or the equivalent of Naira – can now count on the documents of your client (KYC) and anti -flowage (AML) already deposited with their banks. The same goes for corporate entities engaging transactions up to $ 5,000.

For higher value agreements, however, complete documentation as stipulated in the CBN exchange manual remains compulsory. The bank reiterated that exporters and importers are solely responsible for ensuring that regulatory documents are subject to government agencies concerned during the authorization of goods.

In a decision that points to greater liberalization of the Forex market, the CBN has also granted authorized dealership banks to offer foreign exchanges for Papss regulations directly from the Nigerian exchange market, eliminating the need for CBN intervention.

The circular clearly indicates that all export products routed via PADS must be certified by the processing bank. It is a question of ensuring compliance with the laws on exports of Nigeria and to prevent the abuses of the new framework.

Banks have had the mandate to upgrade their internal infrastructure to accommodate PADS transactions, while businesses and individuals are encouraged to familiarize themselves with the updated documentation rules and take advantage of the opportunities offered by Papss.

A system built for African trade

Launched in January 2022 by AfrixBank in partnership with the African Union and AFCTA secretariat, PADS was designed to combat one of the largest bottlenecks in African exchanges: ineffective and costly cross -border payment systems that depend strongly on third -party currencies such as the US dollar or the euro.

Papss eliminates delays in conversion, lowers transaction costs and increases liquidity in the negotiation corridors in Africa by allowing instant settlement in local currencies. For Nigeria, which remains one of the largest economies in Africa, the adoption of PAPS should create new ways for the expansion of trade, especially among West African neighbors.

The system also allows real -time payment regulations in participating countries, strengthening confidence between business partners and reducing the administrative burden associated with currency exchanges.

Implications for the regional commercial position of Nigeria

This last CBN directive sends a strong signal of Nigeria’s commitment to the AFCFTA agenda. It represents a decisive effort to harmonize commercial infrastructure with continental objectives and to keep the commercial dependence of Nigeria from world currencies towards a more autonomous regional ecosystem.

For Nigerian banks, the immediate task will be to operationalize the PADS functionality, to adapt to new compliance requirements and educate customers on how to enjoy the platform. This could mean the overhaul of internal compliance systems and the growing awareness of business customers.

Exporters and importers should earn the most, especially small and medium -sized enterprises that often have struggles with access to currencies and costs associated with cross -border transactions. With Papss, they can now negotiate using Naira while their business partners receive payment in their local currency – eliminating the need for US dollars or euros as intermediaries.

Although the new rules can take some time to integrate into the banking sector, the long -term benefits of the economy are clear: faster transaction times, lower costs and deeper trade links with African counterparts.

In the context of the Nigeria Forex shortages and external pressures on its reserves, financial experts believe that PAPS could offer a strategic solution to reduce the dependence on dollars in the economy and improve financial sovereignty.