Nigeria’s push to diversify its economy away from oil dependency gained fresh momentum in the first quarter of 2025, with non-oil exports surging by nearly 25% compared to the same period last year.

According to the Nigeria Export Promotion Council (NEPC), the country recorded $1.791 billion in non-oil exports between January and March 2025 — up from $1.436 billion in Q1 2024.

The Council’s Director-General, Dr. Nonye Ayeni, revealed this during the public presentation of the First Quarter Progress Report on Non-Oil Export Performance in Abuja on Monday. She described the uptick as a promising signal of growth in Nigeria’s export diversification agenda.

“In the first quarter of 2025, a total of 197 distinct products were exported,” Ayeni said, a clear improvement from the 162 products recorded in Q1 2024. The list includes manufactured and semi-processed goods, industrial extracts, and a wide range of agricultural commodities.

Cocoa and its derivatives — cocoa butter, cocoa liquor, and cocoa cake — were the dominant exports, making up 45.02% of the total. Urea/fertilizer followed with 19.32%, while cashew nuts accounted for 5.81%. Other key products included sesame seeds, soya bean meal, rubber, gold dore, aluminum ingots, and copper ingots.

The volume of exports also rose sharply. According to the NEPC, Nigeria shipped out 2.416 million metric tons of non-oil products in the quarter — a staggering 243.44% increase from the 1.937 million metric tons reported in Q1 2024. Dr. Ayeni said the leap indicates that more stakeholders are tapping into the country’s expanding non-oil export landscape.

Corporate exporters such as Indorama Eleme Fertilizer and Chemical Ltd, Starlink Global and Ideal Ltd led the charge, contributing 12.07% and 10.00% respectively of the total export value.

Boost from PAPSS and Regional Integration

While the export gains highlight growing confidence in Nigeria’s non-oil sector, they also reflect broader efforts by the Bola Tinubu administration to embed Nigeria more firmly into regional and continental trade frameworks.

One of the key pillars designed to support this effort is the Pan-African Payment and Settlement System (PAPSS), a cross-border financial infrastructure designed to facilitate payments in local currencies across African nations. PAPSS allows businesses to settle transactions efficiently, reduce costs, and mitigate currency risks by eliminating the need for third-party currencies like the U.S. dollar in intra-African trade.

The NEPC report noted that Nigeria’s exports to 10 ECOWAS countries grew significantly — reaching $63.060 million in Q1 2025, an increase of 223.10% from the $19.517 million recorded in the same period last year. Exports to other African countries stood at $32.732 million, representing 1.83% of total non-oil exports.

Officials believe there will be improvement in the next quarter due to the PAPSS initiative, which has been promoted as a major lever under the African Continental Free Trade Area (AfCFTA). Launched by the African Export-Import Bank (Afreximbank) in collaboration with the African Union and AfCFTA Secretariat, PAPSS aims to harmonize trade payments, improve liquidity, and strengthen economic integration across the continent.

Through PAPSS, Nigeria is positioning itself to capitalize on AfCFTA’s goal of creating a single market of over 1.3 billion people with a combined GDP of over $3 trillion. In practical terms, this could mean faster transactions, lower banking fees, and improved competitiveness for Nigerian exporters within the continent.

Dr. Ayeni emphasized that the NEPC is working closely with the Federal Ministry of Industry, Trade and Investment to drive the implementation of export-focused initiatives. This includes scaling up trade facilitation, simplifying export documentation, improving logistics infrastructure, and expanding support to small and medium-scale exporters.

In January, the NEPC reported the highest annual non-oil export value in its 49-year history — rising from $4.517 billion in 2023 to $5.456 billion in 2024, a year-on-year increase of 20.77%. The Q1 2025 numbers suggest that the country may be on course to surpass last year’s figures if the current momentum is sustained.

“The Council’s strategy aligns with the national agenda to diversify Nigeria’s economy, reduce over-reliance on oil revenues, and build a more sustainable, export-driven economy,” Ayeni said.

Analysts say that by coupling export growth with tools like PAPSS and strategic engagement with AfCFTA, Nigeria is gradually beginning to shift the structure of its trade relationships — from oil-centric exports to a broader portfolio of value-added products across multiple African markets.

In a bold step aimed at improving cross-border payment efficiency and deepening regional trade integration, the Central Bank of Nigeria (CBN) has directed all banks operating within the country to commence the use of the Pan-African Payment and Settlement System (PAPSS) for originating transactions.

The directive, which took effect through a circular issued on April 28, 2025, marks a significant shift in Nigeria’s approach to facilitating payments across African borders. It comes amid efforts to fully align Nigeria’s banking system with the African Continental Free Trade Area (AfCFTA) initiative.

According to the apex bank, the decision follows a recent overhaul of the documentation framework governing PAPSS transactions in Nigeria. The new rules are designed to streamline participation for financial institutions, corporate exporters, and importers, as well as individuals, in order to maximize the benefits of intra-African commerce.

The statement, signed by the CBN’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, underscores the bank’s intention to promote inclusive financial systems while reducing the country’s reliance on the U.S. dollar for regional trade settlements.

Simplified Requirements for Low-Value Transactions

Under the revised policy, the CBN introduced a key change that simplifies documentation for low-value transactions. Individuals transacting up to $2,000—or the naira equivalent—can now rely on Know Your Customer (KYC) and Anti-Money Laundering (AML) documents already filed with their banks. The same applies to corporate entities engaging in transactions up to $5,000.

For higher-value deals, however, full documentation as stipulated in the CBN’s Foreign Exchange Manual remains mandatory. The bank reiterated that exporters and importers are solely responsible for ensuring regulatory documents are submitted to relevant government agencies during goods clearance.

In a move that points to greater liberalization of the forex market, the CBN also granted Authorized Dealer Banks permission to source foreign exchange for PAPSS settlements directly from the Nigerian Foreign Exchange Market, eliminating the need for CBN intervention.

The circular makes it clear that all export proceeds routed through PAPSS must be certified by the processing bank. This is to ensure compliance with Nigeria’s export laws and prevent abuse of the new framework.

Banks have been given the mandate to upgrade their internal infrastructure to accommodate PAPSS transactions, while businesses and individuals are encouraged to familiarize themselves with the updated documentation rules and take advantage of the opportunities PAPSS offers.

A System Built for African Trade

Launched in January 2022 by Afreximbank in partnership with the African Union and AfCFTA Secretariat, PAPSS was designed to tackle one of Africa’s biggest trade bottlenecks: inefficient and expensive cross-border payment systems that depend heavily on third-party currencies like the U.S. dollar or the euro.

PAPSS eliminates conversion delays, lowers transaction costs, and increases liquidity within Africa’s trading corridors by enabling instant settlement in local currencies.  For Nigeria, which remains one of Africa’s largest economies, the adoption of PAPSS is expected to create new avenues for trade expansion, especially among West African neighbors.

The system also allows for real-time payment settlement across participating countries, strengthening confidence among trading partners and reducing the administrative burden associated with currency exchanges.

Implications for Nigeria’s Regional Trade Position

This latest directive from the CBN sends a strong signal of Nigeria’s commitment to the AfCFTA agenda. It represents a decisive effort to harmonize trade infrastructure with continental objectives and to shift Nigeria’s trade reliance away from global currencies toward a more self-sustaining regional ecosystem.

For Nigerian banks, the immediate task will be to operationalize PAPSS functionality, adapt to new compliance requirements, and educate customers on how to take advantage of the platform. This could mean revamping internal compliance systems and increasing awareness among corporate clients.

Exporters and importers stand to gain the most, particularly small and medium-sized businesses that often struggle with access to foreign exchange and the costs associated with cross-border transactions. With PAPSS, they can now trade using the naira while their trading partners receive payment in their local currency—eliminating the need for U.S. dollars or euros as intermediaries.

While the new rules may take some time to embed across the banking sector, the long-term benefits for the economy are clear: faster transaction times, lower costs, and deeper trade linkages with African counterparts.

Against the backdrop of Nigeria’s forex shortages and external pressures on its reserves, financial experts believe that PAPSS could offer a strategic solution to reduce the economy’s dollar dependency and improve financial sovereignty.