CBN says pan-African payment system to improve naira convertibility
The Central Bank of Nigeria (CBN) on Tuesday announced that it is working with key stakeholders in the African continent, particularly the Afrexim Bank, to improve the underlying payment infrastructure to support greater intra-regional trade through the Pan African Payments and Settlement System (PAPSS).
The initiative will enable payments in Nigeria’s local currency for goods in other African countries and vice versa, without the need for a third-party currency.
Also, the initiative will help to reduce the cost of cross-border trade, improve convertibility of the naira, and increase trade opportunities for Nigerian businesses in Africa.
Although Nigeria stands to gain from expanded trade, Godwin Emefiele, governor of the CBN, reckons that it is also important to pay attention to the cost that expanded trade through the AfCFTA could have on local businesses and communities.
Emefiele, who spoke at Zenith Bank’s export seminar in Lagos, said the CBN has taken considerable steps to improve the productive capacity of businesses, which would enable them take advantage of export opportunities in Africa.
“Our intervention programmes in the agriculture and manufacturing sectors are helping to enable businesses to expand their scale of production, which is meeting growing domestic demand for goods, but also providing goods for the export market,” he said.
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The CBN had set up a N500bn non-oil export stimulation facility with the Nigerian Export-Import Bank (NEXIM). This initiative will also help to enable greater exports of processed agriculture commodities into other markets in Africa and in the global market.
“Improving the business environment in Nigeria is also vital if we are to harness the gains from the AFCFTA,” Emefiele said.
The Central Bank through its Trade Monitoring System portal (TRMS) is also helping to reduce the time it takes to complete the export documentation process, as faster turnaround time could help to reduce delivery time for goods destined for export and enable businesses expand their output.
Today, businesses can complete their NXP applications on the TRMS portal in 30 minutes relative to two years ago, when it could take as much as two weeks to complete the process.
Emefiele disclosed that the CBN is also working with stakeholders to reposition the Nigerian Commodity Exchange, which would help to support greater trade for operators in these vital sectors earlier mentioned.
Once the exchange becomes fully operational in the 2nd half of the year, he said international buyers of raw and processed agricultural commodities will be able to enter into forward contracts with domestic suppliers on the exchange, and they can be assured of not only the quality of the goods sold through the exchange but on the expected date of delivery.
“We believe these forward contracts will help to support improved productivity for farmers and agro-processors. It will also help to improve access to credit for these entities using the forward contracts as collateral,” Emefiele said.
“We would also like to urge existing exporters that they endeavour to repatriate their export proceeds as required by law. The CBN guarantees that exporters will have unfettered access to their export proceeds and we do expect that exporters would reciprocate the good gestures of the bank by repatriating their export proceeds to improve foreign exchange inflows into the country,” he said.