John Izuka, (LINK MOMENT).

When it comes to payments – ease of payments for goods and services offshore – it is official, Nigeria has reverted exactly to where it was in the 2000, if not earlier. In those years, there was no Visa or MasterCard platform available to the Nigerian people. The implication was that travelers bought Thomas Cook Traveler’s Cheques and some raw Foreign Exchange (FX) from the Bureau De Change (BDC) to enable them make payments abroad.

Two weeks ago, I told some people that the international payment option for Naira cards would most likely be withdrawn given the economic signs, I was dismissed as a “Prophet of Doom”. Now, I am sure the bank have confirmed me a ‘true Prophet’.

Last week, a friend almost collapsed in Europe when she realized that the exchange rate on her MasterCard transaction was at N278 per USD. She complained! At a point, I had to pinch myself to confirm that I had not miraculously become the Central Bank of Nigeria (CBN) Governor. I told her that it was an indication of the beginning the end of cards if a bank could offer a rate equal to BDC rate. It meant that the only way they could clear the offshore payment was to get Dollars where and at the rate available. It was an ominous sign. She has not forgiven Emefiele, the CBN governor.

Buhari’s Economic Team must recognize that deep creative thinking is required to pull Nigeria from the impending offshore payment Armageddon. This is not time for rhetoric or finger pointing. This is this government’s biggest headache and it must be faced squarely. Or else, Nigerian banks’ offshore Letter of credit lines could be called in ASAP, the average importer will be extinguished, the ordinary Nigerian student abroad can’t use their Naira card for upkeep access, cannot easily pay medical bills, etc.

I understand that there are over US$4 billion requests for offshore payments that are unmet yet by the CBN. As the new year unfolds, fresh school fee bills will pile up once again and Crude Oil prices are still trending southwards. Global corporations have their funds held down here in Naira. They need to remit but currently can’t!

It is therefore almost treasonable for any Nigerian adult who, at this time, is still talking the gains of any political party victory at ANY tribunal for that matter and not how Nigeria can move forward so the economy and the life of the average Nigerian does not grind to a halt. The consequences are too dire to imagine.

Way Forward

  1. CBN should again allow Banks only to import and export FX cash again so they leverage on their global connections to access and utilize FX to meet basic client needs and be able to evacuate FX cash. CBN may increase monitoring here.
  2. Remove all restrictions on FX cash deposits so as to get all FX funds trapped in private vaults and portmanteaux into the system once again. The limit should be on FX withdrawals not deposits.
  3. CBN should launch a subtle campaign to encourage FX stockpilers to convert to Naira so as to lubricate the parallel market. The market is dry!
  4. The government should encourage more Nigerians to export goods, get online and launch business, not Yahoo-yahoo, that can sell stuff and get in some FX. 170 million people?

What do you think? Let’s talk…

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By John Izuka,

Banker