UPDATE: Nigerians studying abroad, others to benefit from new CBN policy

Central bank of Nigeria
Central bank of Nigeria

The Central Bank of Nigeria, CBN, has explained that its new foreign exchange policy is to cushion the hardship faced by Nigerians in paying school fees abroad, medical bills and travel expenses.

The policy announced on Monday was sequel to last Thursday’s directive by the National Economic Council, NEC, for immediate review of the FOREX policy to stem the widening gap between the inter-bank foreign exchange and parallel market rates.

The new policy takes immediate effect.

The NEC meeting presided by Acting President Yemi Osinbajo had expressed concern over the prevailing exchange rate situation in the country, especially the widening gap between inter-bank and the parallel market rates.

While inter-bank rate, which is the official exchange rate approved by the CBN, stood at about N308.50 to the dollar, the rate at the parallel market, which is readily accessible by most Nigerians, rose to as high as N510 to the dollar last week.

The Bank, in a statement on Monday by its spokesperson, Isaac Okorafor, explained that the new policy was to ease the difficulties encountered by Nigerians in obtaining funds for FOREX transactions.

Consequently, the Central Bank said henceforth it would be providing direct additional funding to deposit money banks to meet the needs of Nigerians for personal and business travels, medical needs, and school fees.

Such retail transactions, the CBN said, would be settled at a rate not exceeding 20 per cent above the inter-bank market rate.

On travel allowances, the Central Bank said it would immediately begin to provide FOREX to all commercial banks to meet the needs of both personal travel allowances, PTA, and business travel allowances, BTA, for onward sale to customers.

“All banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements,” the CBN said in a statement.

Similarly, commercial banks would henceforth make payments on behalf of parents, guardians and sponsors in need of FOREX for their children and wards’ school and educational fees directly to the institutions they specified.

Equally, customers seeking FOREX to pay or settle medical bills would also have to pay directly to designated hospitals through their banks.

The Central Bank said it would ensure the process was as smooth as possible, by supplying the FOREX to as many retail end-users as genuinely demanded for PTA, BTA, school fees, medical bills, etc.

Besides, to further increase the availability of FOREX to all end-users, the CBN said it decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.

In addition, to ease the burden of travellers and ensure transactions were settled at much more competitive exchange rates, all banks were directed to open FOREX retail outlets at major airports as soon as possible.

Other steps approved by the bank to cushion the difficulties faced by Nigerians include the immediate implementation of a programme to clear all unfilled orders in the inter-bank FOREX market as well as plan to meet all unfilled orders.

While reaffirming its commitment to prioritise the provision of FOREX to the manufacturing sector, the CBN said it would no longer impose allocation/utilisation rules on commercial banks.

Emphasising the need for total transparency and efficiency in the operations of the FOREX market, the Bank warned it would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offending individuals, banks and their staff.

“The Bank therefore encourages market participants to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians,” the statement said.


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  • GEJ FOREVER

    IN TWO WORDS ……. MULTIPLIED CORRRUPTION!

    This is the clearest evidence that Nigeria is plunging deeper into corruption ….. as in Buhari’s 1980’s … Bankers will once again become millionaires!

    All these failed policies were tried in the 1980’s and they only succeeded in enthroning corruption especially amongst Bankers, promoters of Banks and emergency businessmen.

    In fact, then in Buhari’s 1980’s …. failed infantile deliberate and intentional corruption widening policies of this nature led to the incorporation of Banks solely for purpose of trading in forex.

    Buhari without doubt is a major setback for Nigeria …. Buhari has completely destroyed the little progress Nigeria
    has made under OBJ/YAR’ADUA/JONATHAN…. cry my beloved country!

    • KBE

      I disagree completely with you. With the right policy and monitoring system in place corruption can be checked. All banks must retire their allocation and provide verifiable proof of how forex released to them has been used. The punitive measure for infringement must be harsh and prompt. This will prevent shady deals or corruption. But to say Nigerian that need the forex genuinely and desperately should not have access to it because of misgivings is completely anti people and inhuman.

      • Chris Anyanwu

        I guess you do not see what Gej Forever is seeing. As long as the exchange differential is in place (imagine N308.50 vs N520 as at today), round tripping will continue. Your so-called “monitoring” has been in place and it has been business as usual. Go and try to get the dollar for your trip tomorrow & be told it’s not available only for you to turn your back to see them selling to “oga” who has just paid N100 extra per dollar. And guess what, that money ends up at the black market. Buhari’s regime is known for creating room for more corruption when they say they are fighting corruption

        • Chris Anyanwu

          They should have removed the pegging completely when they tried to loosen up last year. Now that the horrible deed has been done with the flight of investors because they responded way too late, even if the pegging is removed today or not, naira will still hit 600/$ before the end of this year. On the area of fighting corruption, you cannot be fighting corruption & keep the people hungry and even dimishing their purchasing. When you do that, you are fuelling the survival

          • aisha ani

            This is like putting band aid on a bullet wound, not gonna work.

  • Watch man

    I was sitting down in my room listening to PMB on TV during his campaign when he said he will make $1=N1. I am still waiting for him to fulfill his campaign promise as Donald Trump is doing to his American people.

    • Powerlessconscious

      Liar. There was no video nor quoted evidence. Some news paper carry the rumor. A fake news paper like vanguard.

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  • KBE

    A VERY GOOD NEWS. PROVIDED ACTION WILL MATCH THE WORD. FOR ONCE YOU ARE BEING SENSITIVE TO THE PLIGHT OF STRANDED STUDENTS ALL OVER THE WORLD. THIS WILL DEFINITELY FORCE THE BLACK MARKETERS TO PUSH OUT THEIR DOLLARS AND FORCE DOWN THE PRICE OF DOLLAR. KUDOS TO CBN.

  • kayode Olufade

    The reaction from the CBN makes it look as if the complaint at the FEC meeting was about difficulties in paying school fees, travelling abroad and medical bills. The real sector to provide forex to is the trade and industial sector with the industrial sector being the most pertinent as we need to diversify the economy. We need to pump money into Industrilizarion, suffer a little inflation now for a better tomorrow