BTA AND PTA CUTS ADD TO TOURISTS' PROBLEMS AS THE CURRENCY CRISIS WORSENS

Findings have demonstrated that the commercial banks' reduction in the amount of money available to customers for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) is making things more difficult for travelers and stakeholders in the travel industry.

According to information obtained, the latest development is yet another effort by the Central Bank of Nigeria (CBN) to promote stability in the face of the nation.

The new rule, which went into effect right away, reduced the PTA that is now available to customers by 50%, from $4,000 to $2,000, and the BTA by 60%, from $5,000 to $2,000.

Also, the banks changed the FX policy significantly by extending the 48-hour processing window for overseas school tuition submitted via Form A to 120 days.

The Central Bank of Nigeria (CBN) created Form A as an application form for service transactions (invisible trade), to pay for services like school fees, technical fees, dividends, personal home remittance, PTA, and BTA, among others.

Nigeria, like many other nations, has been struggling with a lack of foreign currency as a result of a drop in income from oil, its primary export. The value of the local currency and the nation's foreign exchange reserves have both been impacted by this.

Our correspondents confirmed that a dollar is being exchanged for N745 on Thursday at the bureau de change (BDC) markets in Lagos. As commercial banks adhere to the new guideline, it increased to as high as N750 to a dollar at Lagos' Murtala Muhammed International Airport (MMIA).

This means that after waiting for weeks, you are only eligible for $2000 and must wait another six months to apply for another $2000, according to the information gotten from a traveler. For instance, I'm leaving for a two-week trip to Egypt. If you have access to $2000, the best thing to do is to go to the illicit markets if you can't wait. How will I manage without that？

The truth is that the CBN itself doesn't have dollars, and the commercial banks are dispersing the little they do have on a preferential basis, according to Hassan, a different BDC operator at MMIA. They have those who are given priority.

This will only make travel more challenging and expensive because obviously, $2000 won't make a difference. Due to the fact that $2000 will not be enough for anything, thereby forcing people to shop on the illicit market.

PRIOR TO PRESENT

Commercial banks began issuing card-based dollar disbursements in September of last year.

Many banks, including FirstBank and Access Bank, announced the change in policy in response to an increase in cases of abuse by visitors who get foreign currency but fail to use it for travel-related expenses or turn around to trade the money at black markets.

The Bankers' Committee's policy includes the use of computerized procedures to monitor foreign exchange transactions, prevent fraudsters from misusing the system, and conserve the economy's limited supply of foreign exchange.

Group Managing Director of Guaranty Trust Holding Company Plc, Segun Agbaje, stated that there had been instances of customers presenting expired passports, invalid airline tickets, or open tickets that are canceled after they obtain the foreign exchange at a bankers' committee meeting in Lagos the previous year.

He claimed that other bank customers had also been accused of demanding more foreign currency than they actually needed. Banks do not want “fraudulent transactions taking place” under the cover of currency transactions, Agbaje continued.

PREVIOUS TREATMENTS

In the past three years, the CBN has attempted a number of measures to stabilize the local currency, but with little success. Due to strain on the country's foreign reserves caused by decreasing oil income, the naira has been devalued three times during the first quarter of 2020.

The apex bank stopped selling foreign currency to Bureaux Du Change owners in 2021, claiming that the black market had turned into a conduit for nefarious forex movements and corruption. It provided bonuses to people earning foreign currency last year.

But, the lack of dollars has remained as Nigeria's revenue from oil, its main export, declines. Investments have been impacted by the lack of foreign currency, making it challenging for businesses and investors to repatriate funds. For instance, the International Air Transport Association reports that the stranded funds of international airlines operating in Nigeria increased by 12.39% to $743,721,097 in January 2023 from $662 million in the same period last year (IATA).

DIFFERENT EXCHANGE RATES

Nigeria has a system of many currency rates, which has harmful impacts on investment. In addition to its divisive system of gasoline subsidies, the World Bank Group encouraged the Nigerian government to examine its strategy of having several exchange rates in April 2022.

According to David Malpass, president of the World Bank Group, the multiple exchange rate system is “complicated and is not as effective as it would be if there were a single exchange rate.”

DIFFERENT EXCHANGE RATES HAVE DISTINCT EFFECTS ON VARIOUS NATIONS AROUND THE WORLD

The Central Bank of Nigeria and the Economic Recovery and Growth Plan are already working in this direction to ensure that the country has a unified exchange rate, the official said. “The IMF's policy has been consistent on this issue, such that we advise for the unification of exchange rates,” the official said.