The Central Bank of Nigeria (CBN) has unveiled a progressive circular that dramatically simplifies documentation requirements for transactions via the Pan-African Payment and Settlement System (PAPSS).
This could transform economic interactions for small and medium-sized enterprises (SMEs) operating within the African Continental Free Trade Area (AfCFTA).
Under the new directive, effective immediately, individuals can now conduct transactions up to $2,000 per month with minimal documentation, while corporate entities enjoy a threshold of $5,000. Only basic know your customer (KYC) and anti-money laundering (AML) documents will be required.
Mike Ogbalu III, Chief Executive of PAPSS, described the move as a “transformational milestone for Nigerian commerce”, emphasising the potential for enhanced economic integration. The system now connects 16 African countries, 14 payment switches, and over 150 commercial banks (22 banks are already operational in Nigeria).
Critically, the new policy empowers commercial banks to source foreign exchange through Nigeria’s currency market, providing additional flexibility for cross-border transactions. This development is expected to reduce transaction costs and administrative complexities that have historically impeded intra-African trade.
The initiative falls within AfCFTA’s aims of creating a single market for goods and services across the continent.
PAPSS, a centralised financial infrastructure backed by the African Union and Afreximbank, has been pivotal in this transformation. Launched in January 2022, the system represents a concerted effort to minimise payment risks and promote financial interoperability across African regions.
Banking executives and trade economists have welcomed the move, viewing it as a potential catalyst for SME growth and a more dynamic continental trading ecosystem. The streamlined approach could significantly reduce transaction times and costs, particularly for smaller businesses that complex regulatory environments have traditionally marginalised.
Regulatory hurdles in the region have until now been stringent. As Africa continues to seek economic self-determination, Nigeria’s policy is a landmark reduction in bureaucratic hurdles for pan-African payments.
