From this morning, Nigerian banks will suspend or reduce the amount their customers can spend abroad using debit cards, two of the banks have said, as the lenders try to limit foreign currency settlement risk.
It is yet another worrying sign of the country’s worsening dollar shortages made more severe by the sharp fall in the price of oil, Nigeria’s main export.
Simply put, Nigerian banks are trying to avoid transactions with hard currency reports Reuters.
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 top tier lender Zenith Bank said it will 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. Then it was ordered by the central bank.
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.
Nigeria is yet to resume forex sales to retail currency traders after it banned international travel as part of a lockdown measure to slow the spread of the coronavirus that has killed 778 people and infected more than 36,000.