The Central Bank of Nigeria (CBN) has instructed commercial banks to use the importer and exporter window (I&E) exchange rate for outbound payments made through the Pan-African Payments and Settlement System (PAPSS).
The decision was issued by the CBN in a circular signed by Ozoemena Nnnaji, Director of the Trade and Exchange Department.
PAPSS is a centralized payment market infrastructure for processing, clearing, and settlement of intra-African trade and commerce payments.
It was founded in collaboration with the West African Monetary Institute by the African Export-Import Bank (Afreximbank) (WAMI).
“All authorised dealers are required to ensure that the prevailing exchange rate at the Investors and Exporters Forex Window, as advised by the Financial Markets Department, FMD, is used in cross-rates conversion between Naira, US Dollars, and third currencies within Africa, for outbound payments and vice versa for inflows,” according to the CBN circular.
“Before commencing PAPSS payments, Authorised Dealers must get CBN clearance for dollar cover in order for PAPSS transactions to be settled by CBN.
The request for approval should be sent to the CBN’s Director of Financial Markets;
“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.”
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