Nigerian banks have struggled to meet the FX demands of their customers because of a shortage in supply despite the prices of crude oil rising in the global market.
According to reports, Nigeria’s oil production fell below one million barrels last month, making it more challenging for the nation to increase its revenue from crude oil sales.
First Bank of Nigeria stated that its customers would not be able to use its Naira Mastercard, Naira Credit Cards, virtual cards, and Visa Prepaid Naira card for international transactions beginning September 30, 2022.
This development is triggered by the scarcity of foreign exchange (forex) in Nigeria. Before the recent announcement, First Bank customers routinely carried out international transactions of up to 20 dollars with their naira debit cards.
According to a statement by First Bank, it asked its customers to use its Visa Debit Multicurrency Card, Visa Prepaid dollar Card, and Visa Gold Credit Card for international transactions with limits of up to $10,000.
The Central Bank of Nigeria (CBN) hinted that it might suspend the supply of foreign exchange to banks by the end of the year.
According to reports, CBN Governor Godwin Emefiele said that customers’ hoarding of dollars and other foreign currencies is coming to an end. He predicted that it might happen by the end of 2022.
The exchange rate between the naira and the dollar at the black market or parallel market has risen to ₦712 per dollar since the start of the year, leading to a ₦140 per dollar depreciation this year.
The increase in the exchange rate has affected the Nigerian economy, not only the financial services sector. As a result, financial institutions in Nigeria are implementing policies to lessen the impact of currency inflationary pressures.
Other Banks That May Follow
First Bank will not be the only bank in the country to suspend international transactions on most of their cards. Some of these banks have cut down the number of dollars their customers spend in a month as the naira depreciates.
The banks that may suspend international transactions on Naira cards are:
United Bank of Africa (UBA): In February 2022, the bank became the first to limit its international trade. It decreased international transactions from $100 to $20.
Zenith Bank: In March of this year, Zenith Bank announced that it would decrease its $100 per international transaction cap to $20. Additionally, it suspended all of its POS and ATM operations worldwide.
Guarantee Trust Bank (GTB): Also, in March this year, the bank decreased its international transaction limit from $100 to $20.
Sterling Bank: In March, the bank swiftly issued a statement decreasing international transactions from $100 to $20 monthly.
These banks quickly decided to restrict their customers’ ability to transact internationally. It is possible that the same intense trend could repeat itself, only this time the dollar spend limit would be taken out completely.
However, there are alternative ways to get your international transactions going with a virtual card. Given that it usually works when Nigerian naira master cards do not, it is noteworthy that the dollar virtual card serves as an advance payment tool for Nigerians.