- Manufacturing sector retains priority status
Deposits money banks in Nigeria have been directed by the Central Bank of Nigeria (CBN) to commence the sale of foreign exchange at major airports across the country, in order to ease difficulties experienced by travellers in foreign exchange transactions.
The directive was part of new Policy Actions in the Foreign Exchange Market released by the apex bank on Monday in continuation of efforts to increase the availability of Foreign Exchange.
The apex bank restated its position on making the provision of foreign exchangen to the manufacturing sector its strong priority.
In an official statement, signed by Isaac Okorafor, Ag. Director, Corporate Communications, CBN said that it will be providing direct additional funding to banks to meet the needs of Nigerians for Personal and Business Travel, Medical needs, and School fees, effective immediately to be settled at a rate not exceeding 20 per cent above the interbank market rate.
The CBN said that having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, it 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.
It said all banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.
School 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 said it 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 CBN assured that it would sustain supply of FX to retail end-users (PTA, BTA, School fees, medical bills, etc).
Forward Sales Tenor
In order to further increase the availability of foreign exchange to all end-users, the CBN also 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.
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 directed all banks to open FX retail outlets at major airports as soon as logistics permit.
Increase Efficiency of FX Market
In order to maintain confidence in the FX market, the CBN said it will immediately take the following steps: 3 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.
“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,” the statement read.