$20 FX spend limit on back of scarcity to become widespread

BY: CHARLES ABUEDE

On the heels of the decision by the Central Bank of Nigeria (CBN) to put a stop to the sale of foreign exchange to banks, Nigerian banks are now taking measures in response to the CBN move and as a way of adjusting their portfolios.

With the apex bank already informing the banks to devise their own means of sourcing foreign exchange, the banks are starting with ensuring that they do not leak the forex in their vaults.

The banks, for instance, are limiting the amount that customers can spend on the cards when they go abroad.

The banks, it has come to light, are now placing a limit on international ATM withdrawals and points of sales (PoS) payments, as well as transaction limits using the Naira cards with a review of a transaction limit of $20 from the initial $100.

Commercial banks noted, via an email notification to customers, “Is in response to current economic realities on foreign exchange in Nigeria.”

Sometime in February 2022, Godwin Emefiele, Central Bank chief, said the bank will halt the sale of FX to banks as these institutions must begin sourcing their forex from export proceeds beginning from December 2022, hence the need to support non-oil exporters in the country. He said the decision was in line with the bank’s new commitment to boost the country’s foreign reserves through proceeds from non-oil exports.

“Before or latest by the end of this year, (DMBs) will not come to the CBN for foreign exchange again. They should go and generate their export proceeds, fund people who want to generate non-oil export proceeds, when the proceeds come we will fund them at five percent for you, the proceeds will earn rebates, that is how we can help you.

“The banks don’t have a choice and I said the era where because a bank needs $100 million foreign exchange or $200 million, they will bring the request to the CBN to fulfil, is coming to an end. But when those proceeds come, sell the proceeds to importers; don’t come to the CBN for the dollars because we will stop providing. We will stop it,” the governor said.

The banks appear to be drawing attention to the challenge ahead with regards to the directive.

Communicating via email notification some of the banks informed customers of the illiquidity currently within the system in line with the directive of the banking sector regulator.

First Bank of Nigeria in a notification writes, “Due to current market realities on foreign exchange, we’ve reviewed cross border transaction limits for the Naira Mastercard and the Naira Credit Card to $50 monthly. For increased transaction limits, please use your Visa Debit Multi Currency Card, Visa Prepaid (USD) Card and Visa Gold Credit Card to enjoy transaction limits up to $10,000 and other exciting benefits.”

Zenith Bank, in an email, writes, “Please be informed that we have temporarily suspended the use of Zenith Bank Naira cards for international Automated Teller Machine (ATM) cash withdrawals and PoS transactions.

“Additionally, the monthly international spend limit for weekly transactions has been reviewed from $100 to $20. This review is in response to today’s economic realities. If you have higher International spend requirements, kindly visit any of our branches and request for a foreign currency debit or prepaid card, which are available in US dollars, Pounds, and Euro variants.”

Meanwhile, the concerns being expressed by Nigerians is that it is just a matter of time before all the banks announce the same ‘No forex’.

First, it was the United Bank for Africa (UBA) that announced a $20 limit, which was then followed by Zenith Bank and First Bank. It is being speculated that before the end of the month other commercial banks will follow the same line in order to bring to fruition the CBN directive and fully join the race to achieve the target of $200 billion in foreign exchange from non-oil export proceeds.