Over the past month, Nigeria’s commercial banks declared reduced limits on international transactions using naira debit cards to $20 per month.
It means Nigerians would be unable to use their naira debit cards to make any transactions more than $20 in a month. This comes as a longstanding scarcity of foreign exchange continues to bite Africa’s largest economy and biggest oil exporter, Nigeria, despite the recent surge in global energy prices.
Technology companies and Nigerians who are dealing with dollars in their business opted for alternatives, some financial companies partner with foreign companies to provide virtual dollar cards, but at black market rate.
Also, Chipper Cash, its alternative, is not providing dollar virtual cards to its new customers.
Standard Chartered Bank who offers international banking service has also suspended international spending on its Debit card starting from August 1.
The bank stated this in a mail to customers, which was signed by its head of deposits, debit cards and mortgages.
Though Nigerians can use their naira-denominated debit cards to pay for transactions billed in US dollars online, for every purchase, debits are made directly from their naira accounts at current exchange rates.
There is uncertainty among small tech businesses and Nigerians who are dealing with the dollar. This is as the dollar spending limit and suspension of virtual cards ground businesses. Business operations who do not have a domiciliary account have been consumed with the policy and they cannot make any importation or buy with a local currency card.
Lukman Ibrahim, a Chief Executive Officer of Halal Payments Network, a tech company in Nigeria while speaking with newsmen said the company’s cloud infrastructures which mostly dominate the company’s App server is based in the United State of America.
Limitations on dollar spending and suspension of dollar virtual cards which was the alternative have deterred the company from paying the subscription and is affecting the business.
What Nigerians should do
The CEO, Cowry Asset Management Limited, Johnson Chukwu said the policy is part of the effort by CBN to manage the reserve. According to him, the policy has “unintended negative implications on the average consumer because there are a couple of things you consume that we are not producing. It simply means we have been denied that opportunity we are having to consume that thing, so the reality is that Nigerians are going through difficulties in international trade, even those that are into imports.
On the policy, he said, “the Central Bank might be able to detect that some people are playing games with it because they change the law recently to make it difficult for people to withdraw or get foreign currency from the bank, which is certainly going to have effects on the businesses because most of the business that are into dollars business are really affected by the amount of transaction they can make.”
According to him, “the fact remains that stock businesses were supposed to have their domiciliary account, those who have a domiciliary account are still doing business but those people that didn’t have are the one facing major problems.