The Central Bank of Nigeria has said that it is in talks with the African Export-Import Bank to work out a viable payment settlement system that will allow trade payment in other countries with the naira.
The apex bank governor Godwin Emefiele said this at the Zenith’s Bank 2021 Export Seminar.
Nigeria had ratified the African Continental Free Trade Agreement to enable smooth expansion of local businesses through the bloc.
According to Emefiele, full implementation of the AFCFTA, is expected to give Nigerian firms preferential access to markets in Africa worth $504.17bn in goods & $162bn in services.
Nigeria also hopes to improve its foreign exchange earnings from the trade bloc.
But the continent needs a viable payment arrangement that would ensure seamless payment, the Central Bank boss said.
He said, “Supporting greater trade within Africa would also require the presence of a viable payment settlement system,” adding “in this regard, the CBN is working with key stakeholders in the African continent.”
The CBN governor said the bank is in talks with AFREXIM Bank to improve the underlying payment infrastructure to support greater intra-regional trade, through the Pan African Payments and Settlement System.
“This initiative will enable payments in our local currency for goods in other African countries and vice versa, without the need for a third-party currency.
“This initiative will help to reduce the cost of cross border trade, improve convertibility of the Naira, and increase trade opportunities for Nigerian businesses in Africa,” he added.
Emefiele expressed optimism that Nigeria stands to gain from expanded trade, but he said it was important to pay attention to cost.
Nigeria had shut down its land borders in August 2019, with neighbouring Benin, Cameroon, Chad and Niger over smuggling and insecurity concerns.
Emefiele said, “Smuggling of goods produced in non-African countries into Nigeria, and abuse of rules of origin have often resulted in significant job losses and displacements of workers in key sectors of our economy such as agriculture and manufacturing.
“ It is vital that we work with the governing body of the AFCFTA in addressing these concerns, as it has profound implications on unemployment and security in Nigeria.”
The governor also pleaded with exporters to repatriate their export proceeds to improve forex liquidity in the economy.