Trade within Africa has long been settled outside Africa. A Nigerian importer buying from Ghana or Kenya has typically routed payment through a US dollar correspondent bank abroad, converting Naira to dollars and back again, paying spreads and fees at each hop and waiting days for funds to clear. The continent traded with itself through a third currency it did not control. The Central Bank of Nigeria’s activation of PAPSS is aimed at that detour.

The CBN has switched on Nigeria’s participation in the Pan-African Payment and Settlement System, the Afreximbank-backed platform that enables instant cross-border transactions settled in local currencies. The principle is to let a Nigerian business pay a counterparty in another participating African country in Naira, with the recipient receiving their own currency, while the system handles settlement between central banks behind the scenes. The intermediary dollar leg, and much of its cost and delay, is removed.

The FX Case: Reclaiming the Margin

The most direct benefit is foreign exchange. Every intra-African transaction that no longer needs to be converted into dollars is demand for scarce dollars that simply does not arise. For Nigeria, where pressure on the Naira and on the Central Bank of Nigeria’s reserves has been a persistent constraint, removing the dollar from a category of trade payments eases that pressure at the source rather than after the fact.

The saving is not only macro. For an SME importing inputs from a neighbour, the costs of correspondent banking — conversion spreads, intermediary fees, multi-day delays — fall directly on the margin and the cash flow. Settling instantly in local currency keeps that margin with the trader. What the central bank gains in reserves, the operator gains in working capital.

A payment that skips the dollar keeps the cost of trade at home.

The Trade Case: Plumbing for AfCFTA

PAPSS matters most as infrastructure for a larger ambition. The African Continental Free Trade Area is meant to lift trade between African countries, which remains low as a share of the continent’s total commerce compared with intra-regional trade elsewhere. A free-trade agreement lowers tariffs, but if paying across a border stays slow and expensive, the friction migrates from customs to the bank.

This is where the local and continental stories meet. For a Lagos exporter, PAPSS is a cheaper, faster way to get paid by a customer in Accra or Nairobi. For the continent, it is the settlement plumbing without which AfCFTA’s tariff promises struggle to translate into actual goods crossing actual borders. A free-trade zone needs a payment system as much as it needs a rulebook.

Lower tariffs open the door; instant local-currency settlement is what lets the goods walk through it.

The Operator’s View: From Live to Used

Activation is the start, not the finish. The system’s value to a Nigerian business depends on how many counterparties’ countries and banks are reachable through it, how predictable the exchange rates applied are, and whether commercial banks integrate PAPSS into the channels businesses already use rather than treating it as a separate process.

The pattern from payment infrastructure generally is that adoption lags availability. Treasurers and trade-finance desks change long-standing habits only once the new rail is demonstrably cheaper, faster and reliable across the corridors they actually use. The CBN switching it on is necessary; banks and businesses making it routine is what realises the benefit.

The Read for Decision-Makers

For a Nigerian firm trading within Africa, PAPSS is worth understanding now and testing on real corridors as coverage grows. The potential gains are concrete: lower transaction costs, faster settlement, and reduced exposure to dollar scarcity on intra-African payments.

The wider significance is that Nigeria is wiring itself into a continental settlement layer designed to let Africa trade with Africa on its own terms. Whether that potential is realised will be measured not in the switch being flipped but in the share of cross-border payments that quietly stop touching a dollar at all. Read more on the system at PAPSS.