DEPOSIT Money Banks (DMBs) are turning down payment requests from customers seeking to pay business partners abroad with naira debit cards.
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Banks are asking customers paying clients abroad to do so in the currency of the beneficiary’s country, as against the previous practice where lenders debited the naira accounts of customers at the prevailing exchange rate and remitted dollar equivalent to the offshore beneficiary’s account.
It was gathered that the old practice was depleting foreign reserves and putting pressure on the naira – dollar exchange rate at a time Nigeria’s dollar earnings are on the decline due to low oil prices caused by the coronavirus pandemic.
Many banks are not only insisting that customers pay in the currency of the recipient’s country, but also that it must be through inflows from abroad in line with CBN’s domiciliary account policy, which directed that only electronic fund transfers into domiciliary accounts can be transferred from such accounts to third parties, while cash deposits into such accounts can only be withdrawn in cash.
GTBank Card Services Team emailed one of its customers paying for online advert placement on Facebook with her naira debit card, saying her transaction request was declined, based on a temporary restriction it placed on Dynamic Currency Conversion (DCC) on all banks’ cards.
It said: “Dear Valued Customer, Declined Card Transaction: DCC Restriction. Thank you for using your GTBank Naira MasterCard. Please be informed that your transaction with the details below could not be completed because you have selected the DCC payment option (Dynamic Currency Conversion) that allows you to pay in Naira, which has been temporarily restricted on all our cards. Please reattempt the transaction and select the currency of the country you are transacting in.”
The Head of Research, Afrinvest West Africa Limited, Abiodun Keripe, explained that it is the CBN that makes dollar payment for customers after their naira accounts are debited for transactions. He however said the CBN’s ability to pay dollar on customers’ behalf is dependent on Nigeria’s available dollar reserves, which he added have been on decline even before the outbreak of the novel coronavirus in December leading to drop in crude oil prices. Brent crude fell to $32.50 per barrel as at Sunday evening.
The naira like the reserves, has received serious beating in the last few months. In the foreign exchange market, the CBN spot rate traded flat last week at N361/$, while the rate at the parallel market depreciated N10 to N455/$. At the Investors’ & Exporters’ (I&E) Window, the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) rate appreciated 94 kobo to close at N386 to the dollar. The foreign reserves stood at $35.03 billion on May 14, data from the CBN website showed.
However, activity level in the I&E Window moderated last week as total turnover declined three per cent to $163.3 million from $168.3 million recorded in the previous week.
CBN Governor Godwin Emefiele has rolled out policies to conserve foreign exchange and protect the naira. The new domiciliary account policy that sets limits on dollar transactions, restriction of importers’ access to dollars and sale of high-yielding debt to foreign portfolio investors are some of the policies.
The CBN also restricted importers of milk from accessing foreign exchange from he official window and limited the importation of milk and other dairy products to six firms- FrieslandCampina WAMCO Nigeria; Chi Limited; TG Arla Dairy Products Limited; Promasidor Nigeria Limited; Nestle Nigeria PLC (MSK only), and Integrated Dairies Limited.
Emefiele has also assured foreign investors that repatriating of their funds from the country was secured, despite forex related revenue shortages. He said the apex bank has put measures in place to ensure an orderly exit for those that might be interested in doing so and also urged investors to be patient as such repatriations are processed, owing to the bank’s policy of orderly exit of investments.
Culled from TheNation.net
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