Nigeria’s foreign exchange crisis has worsened as Nigerian banks are about to suspend or reduce the amount their customers can spend abroad using debit cards as lenders try to limit foreign currency settlement risk.
This development according to experts is due to the country’s dollar shortages, which was heightened by the sharp fall in the price of oil — Nigeria’s main export.
According to a Reuters report, Nigerian banks are trying to avoid transactions with hard currency.
Stanbic IBTC Bank, the local unit of South Africa’s Standard Bank, said it will halve the spending limit for offshore card transactions to $500 per month from Monday and will limit cash withdrawals to $100.
Another lender, Zenith Bank, said it would temporarily suspend the use of debit cards abroad for cash withdrawals and cut the monthly spending limit abroad by more than half to $200.
“This review is in response to today’s economic realities,” Zenith said in a notice, advising clients to request prepaid dollar cards.
Other lenders — Ecobank and Fidelity Bank, have also been sending circulars to their customers alerting them about how they have lowered withdrawal limits for individuals while abroad.
Nigeria has been made to travel this miserable route before, precisely at the behest of the Central Bank and it brought no light at the end of the tunnel.
However, this time, it was not clear if the regulator was behind the latest action. The Central Bank did not respond to a request for comment.
The Bank is battling to conserve dollar reserves that are down 19% from a year ago. Last week, it depreciated the currency on the official market prompting the naira to weaken on the black and over-the-counter spot markets.
Bankers told Reuters that it now takes more than six months to settle foreign lines of credit.
Due to the COVID-19 pandemic and international travel bans, Nigeria is yet to resume forex sales to retail currency traders.