Nigeria's Apex Bank recently released information on its "New Policy Actions in The Foreign Exchange Market" where it directed all financial institutions in the country to open Foreign Exchange outlets at major Airports to trade in Dollars and other foreign currencies.
This directive, signed by the acting Director, Corporate Communications, Mr. Isaac Okoroafor, is aimed at reducing the difficulties currently encountered by Nigerians in obtaining foreign exchange transactions.
This directive however comes with a condition..."as soon as Logistics permit". ....We wait patiently till when "Logistics permits".
Back to the news: To facilitate this initiative, the CBN is providing direct additional funding to banks to meet the needs of Nigerians for Personal and Business Travel, Medical needs and School fees...
This part of the initiative is believed to be "effective immediately".
...Kudos!
Such retails transactions according to the CBN, is expected to be settled at a rate not more than 20% above the inter-banking market rate.
....Another kudos!
With regards to Travel allowances" the statement read:
"Having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, the CBN would immediately begin to provide foreign exchange to all commercial banks to meet the needs of both personal travel allowances (PTA) and business travel allowances (BTA) for onward sale to customers. all banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements."
On "School Fess and Medical Fees":
"Similarly, the CBN would meet the
needs of parents, guardians and sponsors who are seeking to make payments of
school and educational fees for their children and wards. Such payments must be
made by commercial banks directly to the institution specified by the customer.
The CBN would ensure that this process is as smooth as possible and that as
many customers as possible get the foreign exchange they genuinely demand. This
would also apply to customers seeking to make payments, or purchase foreign
exchange, for medical bills and paid directly to hospitals. The supply of FX to
retail end-users (PTA, BTA, School fees, medical bills, etc) would be sustained
by the CBN."
On "Forward Sales Tenor":
"In order to further increase the availability
of foreign exchange to all end-users, the CBN has decided to significantly
reduce the tenor of its forward sales from the current maximum cycle of 180
days, to no more than 60 days from the date of transaction."
On "FX Sales at Major
Airports":
"In order to further ease the burden of travellers and ensure that
transactions are settled at much more competitive exchange rates, the CBN
hereby directs all banks to open FX retail outlets at major airports as soon as
logistics permit".
On "Increase Efficiency of FX Market":
"In order to maintain
confidence in the FX market, the CBN will immediately take the following steps:
a. Begin implementing its articulated program to clear all the unfilled
orders in the interbank FX market;
b. Given our plan to meet all unfilled orders,
and while provision of FX to the manufacturing sector would remain the CBN’s
strong priority, we will no longer impose allocation/utilization rules on
commercial banks;
c. Implement an effective intervention programme to support
the inter-bank market to ensure adequate liquidity necessary to deliver an
efficient FX market; d. Advise FMDQ to activate its FX Order-Book systems as
soon as possible and also accelerate the on-boarding of FX clients on the FX
Relationship Systems to ensure total transparency of the FX market."
The statement concludes with the following: "Given the
CBN’s objective to continuously and vigorously pursue a transparent, liquid,
and efficient FX Market, the Bank reiterates it would neither tolerate
unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they
banks or their staff. The Bank therefore encourages market participants to
assist in ensuring that these new measures engender the preservation of our
external reserves, stability of our financial system, and growth of our economy
to the benefit of all Nigerians."
Having stated its laudable initiative to "ease the difficulties encountered by Nigerians in obtaining funds for foreign exchange transactions" the cachets lies with its execution and actualisation.
May God grant the CBN and participating institutions the Will-Power to do so.
