The Central Bank of Nigeria, CBN, has ordered banks to apply exchange rates in the Investors and Exporters (I&E) window for outbound payments through the Pan African Payments and Settlement System (PAPSS).
The CBN disclosed this in a circular introducing the Guidelines on Operations of PAPSS in Nigeria, signed by the Director, Trade and Exchange Department, CBN, Dr Ozoemena Nnnaji.
What the CBN is saying
The CBN circular read: “All authorised dealers are required to ensure that prevailing exchange rate at Investors and Exporters Forex Window as advised by Financial Markets Department, FMD, should be used in cross-rates conversion between Naira, United States Dollars and third currencies within Africa, for outbound payments and vice-versa for inflows;
“For settlement of PAPSS transactions by CBN, Authorised Dealers shall obtain the approval of CBN for dollar cover, before initiating payments on PAPSS. The request for approval should be forwarded to The Director, Financial Markets Department, CBN;
“That eligible payment of imports and receipt of export proceeds by the CBN shall be restricted to trade-backed transactions only and that the documentation requirements stipulated in Memorandum 9 and 10 of the Foreign Exchange Manual (2018) and other extant circulars shall apply. Import payments shall also be restricted to goods of African origin.
“That all the required documentation referred to in (1) above should be provided before a transaction is initiated on PAPSS by authorised dealers and their customers;
“That export proceeds repatriated to CBN under PAPSS shall be subject to certification by respective processing banks as being repatriated by the Exporter;
“The provisions of all existing guidelines, circulars and directives on the operations of Foreign Exchange Market shall apply;
“For the avoidance of doubt, only eligible transactions as may be determined by the CBN from time to time shall be eligible for payment on PAPSS. Items classified ‘not valid for Foreign Exchange’ shall remain ineligible.”
What you should know
PAPSS is the first centralized payment market infrastructure for intra-African trade and commerce payments processing, clearing, and settlement. The Afreximbank established it in collaboration with the West African Monetary Institute or WAMI.
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