$20 limit on Naira cards Are Frustrating Nigerians As a result of the country’s currency crisis, the Central Bank of Nigeria began rationing dollars, trapping many Nigerians who were attempting to renew their VISA and e-commerce enterprises in the new regulation.
$20 limit on Naira cards Are Frustrating Nigerians
When the COVID-19 epidemic hit oil prices in 2020, the Nigerian Central Bank began its fight to solve the country’s forex problems.
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In particular, the country’s oil revenue, which accounts for more than 90 percent of its foreign exchange receipts, was under considerable strain.
The Naira’s value has fallen by more than a third, from N305 to N416 per dollar, and the bank has implemented a number of steps to mitigate this effect.
The parallel market rates and the official Importer and Exporter Window are used by Nigeria to sort its foreign exchange liabilities.
After a year-long suspension in 2020, the CBN redirected its weekly intervention to Deposit Money Banks.
Customers of Deposit Money Banks received notices informing them that the monthly transaction limit on their naira debit card had been reduced from $100 to $20, a move that is putting a strain on the bank’s operations.
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Because businesses are only receiving about 10% of their demand from the Central Banks, the FX pressure on Nigeria’s economy has been unmanageable.
When Oluwatobi Samson, the owner of an e-commerce company, tried to renew his hosting package using his Nigerian debit card, he was unable to do so.
Because of the credit card limit, I was unable to reactivate my hosting subscription.” My account was eventually suspended, and I haven’t been able to regain access to it since that happened.
“My bank recommended that I apply for a dollar card, which they stated would take at least seven working days to be available. Until I can afford to renew my hosting subscription, my e-commerce website will be unavailable.
E-commerce owner claimed that in order to utilize his naira debit card to make some purchases, he had to use other ATM cards belonging to pals.
Emeka Jones, another Nigerian, has been unable to renew his VISA for weeks because of the $20 restriction set on naira debit cards by banks.
A renewal of his Canadian VISA would cost him $300. He told us at THENIGERIFAM that he required that much money.
“I tried multiple times to pay for my Visa renewal, but each time I was unable.” He told THENIGERIFAM that his bank had encouraged him to use a dollar debit card.
Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprises, claimed that the scenario will have an impact on e-commerce in Nigeria.
According to Yusuf, “The FX situation is growing more and more scarce. The currency market’s lack of liquidity is reflected in this situation. It indicates that the situation has deteriorated. It was for this reason that the CBN had to issue such a directive. ” And for individuals that require a lot of foreign currency, they’ll simply buy a lot of ATM cards. More accounts are going to be opened for them.
It’s a sign of a “dysfunctional foreign exchange policy framework” when some people are detected with “planty ATM cards,” according to the speaker.
According to him, the wide disparity between the official rate of N416 per dollar and the market rate of N570 per dollar has caused the current situation.
“Because of the increased pressure, they have decided to implement rationing. They’re still rationing, even during the designated window. If you ask for $10,000, they may offer you $1000 or $500, but it is unlikely. When you have it, what will you do with it?
Nigerians are dissatisfied with banks’ $20 limit on Naira cards, which makes it difficult to renew visas and pay for web hosting.
When the Central Bank of Nigeria began to restrict dollars as a result of the country’s tight foreign exchange situation, most Nigerians who were renewing their VISA cards and starting e-commerce firms were unaware that they would become entangled in the web of the new policy.
When the COVID-19 pandemic had a negative impact on oil prices in 2020, the Central Bank of Nigeria began its efforts to correct the country’s forex troubles.
A great deal of pressure was put on Nigeria’s foreign exchange revenues from oil, which account for more than 90 percent of the country’s foreign exchange profits.
The bank implemented a number of initiatives to mitigate the impact of the depreciating Naira, which has fallen from N305 to N416 per dollar, a loss of more than 36% in value.
The official Importer and Exporter Window (I&E Window) and the parallel market rates are used in Nigeria to sort foreign exchange commitments.
However, starting in 2020, the Central Bank of Nigeria (CBN) will stop the weekly intervention to Bureau de Change operators and redirect the funds to Deposit Money Banks.
A number of Deposit Money Banks have sent notifications to its customers informing them that transactions on their naira debit cards have been restricted to $20 per month instead of the previous $100, a move that is having a negative impact on their operations.
Because businesses are only provided roughly 10 per cent of their demand, as reported by the Manufacturing Association of Nigeria, the Central Banks have been unable to cope with the foreign exchange pressure on the Nigerian economy.
When Oluwatobi Samson, the owner of an e-commerce company, told us that his website had been shut down because he was unable to renew his hosting package using his naira debit card, we were shocked.
“I attempted to renew my hosting plan, but my credit card was declined due to the limit put on the card,” he explained. Eventually, my account was suspended, and I have not been able to reactivate it online since that time.
“My bank recommended that I apply for a dollar card, which they stated would take a minimum of seven working days to be processed. This means that my e-commerce website will be unavailable until such time as I am able to renew my hosting contract.
A business owner who operates an e-commerce site claimed that he had to utilize various ATM cards belonging to acquaintances in order for him to complete some transactions with his naira debit card.
Another Nigerian, Emeka Jones, claims that he has been unable to renew his VISA card for several weeks because banks have imposed a $20 restriction on naira debit cards issued in the country.
It was he who informed us at THENIGERIFAM that he need 300 EUR to cover the cost of renewing his Canadian VISA.
“I attempted to make payment for my VISA renewal multiple times, but was unable. I was encouraged by my bank to use a dollar debit card,” he said in an interview with THENIGERIFAM.
Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprises, expressed concern about the grievances of Nigerians and businesses, saying that the scenario will have an impact on e-commerce activities in the country.
“The foreign exchange situation is becoming increasingly scarce,” Yusuf stated. It is a symptom of a lack of liquidity in the foreign exchange market, as explained above. It demonstrates that the issue is becoming slightly more serious. That is why the Central Bank of Nigeria (CBN) had to issue such a directive. And what that will do for folks who require a large amount of forex is cause them to go out and obtain a large number of ATM cards. They will proceed to open further accounts.”
Whenever some people are discovered using fraudulent ATM cards, he says, “this is the kind of circumstance that leads to that, and all of this is a consequence of the broken foreign currency policy framework.” $20 limit on Naira cards Are Frustrating nigeria
He stated that the massive disparity between the official price of N416 per dollar and the over N570 per dollar traded on the parallel market is the root cause of the entire situation.
As a result of the increased demand, they made the decision to ration. They are still rationing even during the designated window of opportunity. If you ask for $10,000, it’s possible that you’ll receive $1000 or $500 instead. “Can you tell me what you’re going to do with it?” Visa Renewal and Web Hosting Payments Are Frustrating Nigerians because of the $20 limit on Naira cards