Foreign banks reject Nigerian ATM cards

• Local operators blame CBN’s Forex policy  • Customers stranded abroad

A new twist in the discredited Central Bank of Nigeria (CBN)’s controlled foreign exchange policy has emerged with plans by Nigerian bank customers to shop with their debit cards, through the point of sale (POS) terminals, particularly, this festive period may have been dashed as foreign banks are now rejecting debit cards, National Daily investigations have shown.
Further investigations showed that Nigerian lenders may have cut the amount that their customers can spend using their cards by over 80 per cent following rejection of their usage by foreign banks due to conflicting exchange rate that has continued to encourage rent seeking and round tripping.
Tales of disappointments from stranded customers in Kenya, South Africa and Dubai, among others as a result of the new twist abound with the submissions of Nigeria customers who could not transact businesses on automated teller machines (ATM) as a result of the restrictions.
“This will surely affect the financial inclusion and cash less policies of CBN as we are beginning to lose confidence in the apex bank,” says a disgruntled customer of a tier two bank in Nigeria.
Another customer, who simply identified himself as Mr. Samuel said, “How can CBN legislate on what it does not have. The Official rate is N196 to the US dollar while it exchanges for N280 n the parallel market, yet, CBN cannot meet the official request, so where do we go from here,?.
While Central Bank of Nigeria continues to maintain the controlled exchange rate at the official rate of N178 to the dollar with parallel market at N280 and restrictions on amount of dollars to be spent abroad. Then greenback continues to be scarce.
This is however encouraging patronage of the parallel market with CBN’ s ability to fund the Forex market reducing on daily basis.
Consequently. Nigerian banks are advising their customers to change to the usage of dollar or pounds sterling debit cards.
The implication is that the Naira MasterCard which had been in use for online and offline transactions for international settlement and transactions are being rejected now because of the controlled Forex regime that had continued to encourage rent seekers and arbitrage.
Also hopes of shopping by Nigerians who usually travel abroad this festive period has been dashed as they are being compelled to change to dollar or British denominated debit cards.
Similarly, banks that are hoping to increase their profit through other self service platforms since it is no longer profitable investing in Treasury Bills may be heading for hard times as their profits will further decline next year.
For the major part of last week, Nigerians banks were sending out memos to their customers to inform them of the unfortunate development.
For instance, Diamond bank had last week sent out a circular to their customers informing them of the restrictions and what they should do to continue to enjoy shopping abroad.. the message reads;
” Due to the current FX market realities, please be informed that your Naira Debit Card has been restricted for usage in UAE, China and African countries.‎
“We encourage you to make use of the Diamond USD Dollar or Diamond GBP debit card to transact in any of the above mentioned countries.”
Other banks like, GTB, First Bank, UBA are believed to be caught up in the web too.
Recently, Central Bank of Nigeria had banned about 41 items from enjoying the official exchange rate of N197/$, a development that had continued to widen the exchange rate as parallel market was going for N280/$.
Some analysts believe that the only way out is to readjust exchange rate in realities of the current times.
Bismarck Rewane, Chief Executive, Financial Derivatives Company, said the only way out is to devalue the Naira. Rewane, in a recent Lagos Business School Dinner meeting in Lagos said that the issue would take a national dimension next year in such a way that government would organise for discussions on the issue.
Razia Khan, managing director and Head of Africa Global Research said that recent decision of the Monetary Policy Committee meeting in reducing only the cash reserve ratio shows that the current tight Forex regime would continue.
“The inference from the policy choice is that there are no plans for imminent change to the fixed FX regime currently in place. Second, the move to an asymmetric corridor around the monetary policy rate formalises the de facto easing that had already been in place since the CBN reduced its open market operations (OMOs) in July.
The easing measures are aimed at boosting Nigeria’s real economy. How successful they are will depend on how much other bottlenecks, currently constraining real-sector activity, can be overcome.
The availability of FX for imported inputs will be closely monitored.