Over the past month, at least 2 of Nigeria’s largest commercial banks have announced reduced limits on international transactions using naira debit cards to $20 (around ₦10,000) per month.
This comes as a longstanding scarcity of foreign exchange continues to bite Africa’s largest economy and biggest oil exporter, despite the recent surge in global energy prices.
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.
Before now, customers could spend up to $100 (₦50,000) on web transactions using their naira cards but that limit has been cut by Zenith Bank PLC and United Bank for Africa (UBA), per emails sent to customers and seen by TechCabal
“The monthly card international spend limit for web transactions has been reviewed from $100 to $20,” Zenith said, adding that the review is “in response to today’s economic realities.”
That statement came about two weeks after UBA told its customers the same in February, with the reviewed naira card limits for international transactions taking effect March 1.
The banks have also suspended the use of naira cards for international Automated Teller Machine (ATM) cash withdrawals and POS transactions, meaning cardholders cannot perform cash withdrawals and payments via those channels outside the country.
“If you have higher International spend requirements, simply visit any of our branches and request for a foreign currency debit or prepaid card, which are available in US Dollar, Pounds, and Euro variants,” Zenith Bank added.
“Remember you can use your UBA Dollar, Pounds or Euro Card for international POS, ATM, and web transactions,” UBA’s mail read. “If you do not have one and would like to subscribe, please visit a branch close to you.”
Unsurprisingly, Nigerians have reacted with displeasure on social media against the new limits as they restrict their ability to pay for international transactions like Netflix subscriptions, ads on Facebook, Twitter, and other platforms.
Apex bank goes digital to boost forex inflows
Nigeria, which depends on revenue from oil for 90% of its foreign exchange and for about 65% of government revenue, has over the past two years seen a massive drop in its foreign exchange earnings on the back of the COVID-19 pandemic-triggered drop in oil prices.
In May 2020, the Director of the country’s Budget Office revealed that the country had lost around 80% of oil revenue due to the crash in oil prices triggered by the pandemic while foreign portfolio investment, another significant source of foreign exchange, declined by 75%.
In response, the central bank has come up with a number of policies and measures to boost foreign exchange inflows, the latest of which is the introduction of electronic invoicing to monitor dollar spending on import and export operations.
Per the CBN, the new measure, which took effect on February 1, aims to “achieve accurate value from import and export items in and out of the country”.
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