The Central Bank of Nigeria, CBN, is now to allocate foreign exchange to end-users, with priority given to matured Letters of Credit, importation of petroleum products, raw materials and machinery.
This is in a bid to effectively manage the nation’s depleted foreign reserves.
The Director of Monetary Policy of the CBN, Moses Tule, who spoke in Abuja, at the weekend said under the new regime, those who take pleasure in wasting the nation’s foreign exchange in shopping abroad would find it increasingly difficult.
“Our priority as a nation for the allocation or use of foreign exchange is for the settlement of matured Letters of Credit, LCs, that have been opened for importation; for the importation of petroleum products until such a time when we have our refineries fully operational and we are not in a position to import fuel again to ensure that the wheels of economic development continue turning and running and for the importation of raw materials.
“By the time we meet these three priority areas, you will discover that people who are using their debit cards overseas for shopping can never be on the priority list.
“We do understand that it may not be all that the demands will be for shopping. We have seen that the reserves are not there and what we have we will use essentially for the purposes that will keep the wheels of the economy running. We have to produce for export, we can’t continue to depend only on the export of crude oil.”
The director said that the CBN synpathised with Nigerians on the ban of the use of debit cards abroad but that there was nothing the institution could do on its own to change the nation’s foreign exchange earnings, as it largely depends on oil receipts.
“It is a healthy development where Nigerians can no longer use debit cards abroad. But it is inconvenient. Right now the country is going through very difficult times because of developments in the oil market. Foreign exchange under the condition Nigeria has found itself has become a seasonal commodity.
“Seasonal in the sense that it depends on the movement of the price of oil. If oil prices are high, then we build reserves, if oil prices are low, then we have no reserves and we will be in a crisis situation.
“Does the CBN sympathize with the situation Nigerians find themselves not being able to use their debit cards outside the country? Yes the CBN certainly does sympathize with the hardship Nigerians are facing, but can the CBN stop it? The CBN cannot stop what the banks are doing now and the reason is very obvious,” he said.
Tule indicated that the policy would not be reviewed any time in the short term, as according to him, the reserves which currently stand at about $29 billion would have to be built up to a figure of around $50 billion before free use of the foreign exchange could be restored.
“The moment we begin to build reserves, we expect that just as this restrictions were not there, most of the restrictions will be lifted but for now, every hand needs to be on deck. We need to earn foreign exchange as a country.
“You can improve your business processes in order to export and earn foreign exchange and that is what the country is calling on patriotic Nigerian businessmen to do.”
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