CBN Promises Adoption of PAPSS by Nigerian Banks
By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) has assured other African countries that it would drive the adoption and implementation of the continent’s new payment system, the Pan-African Payment and Settlement System (PAPSS).
Governor of the CBN, Mr Godwin Emefiele, made this promise on Thursday at the launch of PAPSS, a platform designed to ease cross-border transactions and reduce third currencies for intra-African trade.
Before now, trades in Africa, especially cross-border transactions, required the use of third currencies like the United States Dollars, the British Pound Sterling, Euro and the Chinese Yuan.
With the implementation of the African Continental Free Trade Area (AfCFTA) last year, the need for a payment system to simplify cross-border transactions became necessary and the Africa Export-Import Bank (Afreximbank), in collaboration with the African Union (AU) and AfCFTA came up with PAPSS.
While speaking at the launch in Accra, Mr Emefiele said Nigeria is excited by the opportunities in the adoption of PAPSS, noting that this was why the country became actively involved in the programme.
The banker said the “CBN will ensure the financial institutions under its jurisdiction accept PAPSS and recommend it to businesses across Nigeria.”
He stated that, “Prior to the launch of PAPSS, settlements for intra Africa trade required a third currency and a non-African correspondent bank. This resulted in an estimated loss of close to $5 billion annually and undermined trade in Africa countries.
“The launch of PAPPS gives the fresh opportunity and aspiration for the African continent. It will simplify cross-border transactions, reduce third currencies for intra-African transactions and remove the need for correspondent Banks and ultimately amplify intra trade significantly,” he said.
“As a percentage of total trade, intra-African trade is expected to increase to 35 per cent from 15 per cent in five years with infrastructure provided by PAPSS as payments and settlements are resolved
“With the growing pace of digitisation in financial services, which has been accelerated from the onset of the COVID-19 pandemic, PAPPS can serve as a viable platform for supporting e-commerce in Africa,” he added.