The Central Bank of Nigeria (CBN) has tightened regulations around the Payment and Settlement System (PAPSS) e-payment gateway. PAPSS is an international payment system and cross-border financial market infrastructure that facilitates remittance payments and trade between African countries. The system was recently deployed in the West African Monetary Zone (WAMZ), covering Nigeria, the Gambia, Sierra Leone, Liberia, Ghana, and Guinea.
In response to the deployment, central banks within the region are closely scrutinizing the network and imposing capital controls on fund movements within it. Notably, the CBN recently issued a circular limiting the volume of transactions for dealer banks and customers using PAPSS. The transaction limits were set at $200,000 for dealer banks and $20,000 for customers.
The circular, signed by Ozoemena Nnaji, the CBN’s Director of Trade and Exchange Department, stated that these transactions would be settled using the CBN’s foreign exchange, ensuring that PAPSS’ operations remain trade-backed.
To ensure compliance and control over the system, the CBN explicitly disallowed multiple applications through various Authorized Dealer Banks. Instead, authorized dealers must obtain approval from the CBN for USD cover before initiating payments on PAPSS. The request for approval must be submitted online.
By implementing these measures, the CBN aims to enhance oversight and regulate the flow of funds within the PAPSS e-payment gateway. The move is part of the central bank’s effort to maintain stability and ensure the proper utilization of the system to support legitimate trade and financial transactions within the region.
As the PAPSS system continues to operate and facilitate cross-border transactions between African countries, the adherence to these tightened regulations is crucial for maintaining transparency, efficiency, and security in the region’s financial markets. The CBN’s measures are expected to contribute to a well-regulated and robust financial infrastructure that promotes economic growth and financial inclusion across the participating nations.
