Central Bank of Nigeria Headquarters, Abuja, FCT

CBN directs banks to adopt I&E Forex rate for intra-African transactions

*The Central Bank of Nigeria directs the commercial banks to ensure all the required documentation are provided before a transaction is initiated on the Pan-African Payments and Settlement System by authorised dealers and their customers

Isola Moses | ConsumerConnect

While mandating authorised dealers to obtain its approval for dollar cover before initiating payments on the platform, the Central Bank of Nigeria (CBN) has directed commercial banks in the country to adopt the exchange rate in the importer and exporter window (I&E) for cross border payments through the Pan-African Payments and Settlement System (PAPSS).

Ozoemena Nnaji, Director of Trade and Exchange Department at the CBN, gave the directive in a circular introducing the guidelines on operations of PAPSS in Nigeria.

ConsumerConnect reports PAPSS is a centralised payment and settlement infrastructure for intra-African trade and commerce payments.

The Bankers’ Bank noted the platform was developed by the African Export-Import Bank (Afreximbank) in partnership with the West African Monetary Institute (WAMI).

According to the Bank, the I&E FX window is the market trading segment for investors, exporters and end-users that allows for FX trades to be made at exchange rates determined based on prevailing market circumstances.

Currently, the country’s national currency Naira trades between N410 and N411 at the market, and the CBN has adopted as this as the country’s official rate, according to report.

The Bank also stated, that intra-African businesses would need its approval for banks to convert rates at the prevailing I&E FX rate for cross border payments and transactions.

The CBN’s circular noted: “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 document further said: “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.”

All the required documentation should be provided before a transaction is initiated on PAPSS by authorised dealers and their customers.

It further noted 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, it stated.

Nonetheless, the Bank stated that only eligible transactions as may be determined by the central bank from time to time shall be eligible for payment on PAPSS.

The circular added: “Items classified ‘not valid for Foreign Exchange’ shall remain ineligible.”

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