The news:
- The Central Bank of Nigeria (CBN) issued a circular on Wednesday, February 14, 2024, instructing all authorised dealer banks in the country to discontinue cash payments for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA).
- According to the new directive, all payments, including debit and credit cards, must be processed electronically.
- Furthermore, the apex bank issued a circular titled "Allowable Channels For Payout Of Personal Travel Allowance (PTA) And Business Travel Allowance (BTA)" warning authorised banks not to pay out the PTA and BTA in dollar cash.
According to the circular signed by Dr Hassan Mahmud, the Director of the CBN's Trade and Exchange Department, this new policy aims to improve transparency and stability in the foreign exchange market while preventing malpractices.
The new policy, which encourages using electronic channels for both PTA and BTA and emphasises a continuous shift in foreign transactions, is consistent with the CBN's commitment to strengthening the Naira and keeping a close eye on foreign exchange market activity.
Consequently, all authorised dealers and the general public should take note of the policy change and comply accordingly.
The CBN reiterated its new directive, stating that "For the avoidance of doubt, cash payment of PTA/BTA is no longer permitted."
The circular stated that "Memorandum 8 of the Foreign Exchange Manual and the circular with reference FMD/DIR/CIR/GEN/08/003 dated February 20, 2017, stipulate the eligibility criteria for accessing Personal and Business Travel Allowances (PTA/BTA)."
Speaking before the House of Representatives on Tuesday, February 6, 2024, Yemi Cardoso, Governor of the Central Bank of Nigeria, explained that foreign education and healthcare tourism, among other factors, are to blame for the naira's volatility.
Governor Cardoso stated that approximately $40 billion — $28.65 billion on education and $11.01 billion on healthcare — was invested in these areas between 2010 and 2020, causing the naira to depreciate significantly.
Further, the CBN has reviewed some of its foreign exchange policies to address foreign exchange challenges and protect the naira.
On February 8, the apex bank announced the removal of the previously imposed cap spread on interbank foreign exchange (FX) transactions.
Be the smartest in the room
Give it a try, you can unsubscribe anytime. Privacy Policy.
The banker's bank had previously ordered the removal of the initial cap on exchange rates quoted by International Money Transfer Operators (IMTOs), allowing for market-based limits.
The CBN has also restricted the operations of inbound transfers, mandating IMTOs and banks to pay out inbound foreign currencies only in Naira.
