The Central Bank of Nigeria (CBN) has pegged the amount of dollars to be transacted on the Pan-African Payment and Settlement System (PAPSS), at $200,000 per quarter by authorised dealer bank (ADB) and $20,000 per quarter for a customer.
This was disclosed in a circular dated July 25, 2023, and signed by Ozoemena Nnaji, director of trade and exchange department of the CBN.
PAPSS is an international payment system and cross-border financial market infrastructure enabling remittance payment and trade between African countries.
Read also: What is PAPSS?
The circular said the transactions will be settled using the CBN foreign exchange, adding that PAPSS transactions remain trade backed.
According to the CBN, multiple applications through different ADBs are not allowed.
“For settlement of PAPSS transactions by CBN, authorised dealers shall obtain the approval of CBN for USD cover, before initiating payments on PAPSS. The request for approval shall be submitted online.
“Please note that authorised dealer banks are allowed to maintain a USD settlement account with the PAPSS settlement bank, to settle PAPSS transactions, for which CBN would not provide foreign exchange,” the circular reads.
In June 2023, PAPSS signed a memorandum of understanding (MOU) with five African multinational commercial banking groups for seamless cross-border trade payments.
The banks include Access Bank Group, Ecobank Group, KCB Group, Standard Bank Group, and UBA Group. These significant partnerships aim to revolutionise the settlement of cross-border transactions across Africa, leveraging on the vast network of subsidiaries and representative offices across major economic centres across Africa.
These MOUs were signed on June 2023, at the opening ceremony of Afreximbank’s 30th anniversary and 30th annual meetings held in Accra, Ghana.
Mike Ogbalu III, chief executive officer of PAPSS, said, “these partnerships with Access Bank Group, Ecobank Group, KCB Group, Standard Bank Group, and UBA Group mark a significant milestone in the journey toward a more integrated and efficient African banking landscape.
By embracing PAPSS’ commercial bank settlement model, these banks are helping build a robust continental platform for fostering cross-border payments, thereby paving the way for financial inclusion and substantial continental economic development.”
These MOUs will be put into effect gradually in partnership with central banks in the countries where the five group banks operate. Customers of the banks in Africa will be informed through the usual channels of communication as soon as the service becomes available in their countries. PAPSS and the banks will be working towards making this service available towards year-end.