Travellers groan as banks struggle to meet dollar demand

September 8, 2022 Mary

Some Nigerian bank customers with legitimate foreign exchange demand have decried their inability to access dollars for Business Travel Allowance (BTA), Personal Travel Allowance (PTA) and school fees from banks.

One of the affected customers, who spoke with BusinessDay, said he applied for foreign exchange in one of the tier-one banks, presented all documents but could to get dollars. “I had to go to the black market to buy some dollars before I travelled,” he said.

Banks have often indicated that PTA and BTA requests would be processed and disbursed subject to forex availability and within 14 days of approval.

“When I travelled to London, I was not able to access dollars from my bank; I had to go to the black market to buy dollars,” Jumoke Akiyode, director of communications, PFZ Limited, said.

Another bank customer told BusinessDay that he applied for forex on August 3, 2022 but had yet to get any feedback from the bank.

“Most banks can no longer give out BTA/PTA and the apex bank is not helping matters at all,” Lawan A. A. said on Twitter.

The development is as a result of increased dollar demand amid foreign exchange supply shortage as the Central Bank of Nigeria (CBN) has reduced its dollar allocation to banks, a Lagos-based economist said on condition of anonymity.

“There is an increase in the number of people buying PTA/BTA but supply has not increased. So most banks try to ration the dollar that is available,” said a banker in one of the tier-two banks who did not want to be identified.

“The only way out is for the CBN to increase dollar supply which I doubt could happen, or the government can come up with a policy to reduce or cancel PTA,” he said.

Another strategy being adopted by some banks to address the demand for foreign exchange for PTA and BTA is by creating travel debit cards for seamless transactions abroad.

“We would like to once again inform you that we disburse authorised personal and business travel allowance FX requests through our Access travel debit card,” Access Bank said in a notice to its customers.

Demand pressure at the parallel market has been rising, leading to continued depreciation of the naira to as low as N705 per dollar as at Wednesday, BusinessDay findings show.

The naira fell to its lowest at N436.00 per dollar at the Investors and Exporters (I&E) forex window.

“It is becoming increasingly difficult to source forex from the official market even for items that are not restricted for FX such as diesel imports, raw materials and equipment purchase, foreign tuition and travel allowances,” Taiwo Oyedele, head of tax and corporate advisory services at PwC, said.

He said the scarcity in the official market, coupled with the list of items prohibited for forex, “is pushing more demands to the parallel market which inevitably means further depreciation of the naira against major foreign currencies in the absence of adequate supply.”

“In addition, the interest rate normalisation in the US is making the dollar strengthen against other currencies. This is partly responsible for the recent naira depreciation in the official and parallel markets,” he said.

Some banks have reviewed the process of fulfilling foreign currency requests in order to optimise forex allocation and meet the needs of more valued customers.

“Between now and December 2022, we will process only one maintenance/upkeep request yearly per applicant for a maximum amount of $1.500 and only for customers whose school fees were processed through Access Bank. This is subject to maintenance/upkeep not having already been disbursed previously at any time this year,” Access Bank said in a notice to its customers.

While some Deposit Money Banks have reviewed downwards their international spend limit to $20 per month from $100 per month, others have temporarily suspended the usage of naira cards abroad.

“Please be informed that the monthly spend limit for international transactions on your naira-denominated debit card has been temporarily suspended. Alternatively, you can enjoy higher daily transaction limits by using our foreign currency denominated debit card, which is available in US dollar, Pounds and Euro variants,” Ecobank said in a note to its customers.

Osita Nwanisobi, director, corporate communications at the CBN, said the CBN remained committed to resolving the foreign exchange issues confronting the nation and had been working to manage both the demand and supply side challenges.

He noted that there was huge demand pressure for forex to meet the needs of manufacturers as well as those for the payment of tuition, medical fees and other invisibles.

Nwanisobi said the CBN was concerned about the international value of the naira, adding that the monetary authority was strategising to help Nigeria earn more stable and sustainable inflows of foreign exchange in the face of dwindling inflows from the oil sector.

He said that recent initiatives undertaken by the bank such as the RT200 FX programme and the Naira4Dollar rebate scheme had helped to increase foreign exchange inflow to the country.