Due to CBN recent policy on foreign currency, which bans Bureu De Change operators in the country from buying dollars directly from the apex bank, most Nigerians are now required to buy foreign currency from their commercial banks.

The new CBN policy claims that most BDC operators have allowed themselves to become middlemen in money laundering and therefore, will no longer be able to purchase dollars directly from the CBN which is much cheaper. The policy also directs all licensed commercial banks in the country to setup infrastructures to handle the surge of customers that will be coming their way as BDCs will no longer officially participate in Nigeria’s FX market.

If you’re looking to buy some dollars to travel abroad for school, medical treatment, business or as a tourist, this article will guide you on how to buy and the requirements/documentation you need to present at your bank.

Most commercial banks in Nigeria already buy and sell foreign currency before now, in most bank branches you can withdraw hard currency like you would the naira. But that operation is limited as most Nigerians get their FX from BDCs who are now no longer part of the system.

Banks dispense personal travel allowance (PTA) and business travel allowance (BTA) in Dollars, Pounds or Euro at most of their branches Nationwide, and they cap these at a maximum of $4000 for PTA, $5,000 for BTA or its equivalent per quarter.

How do I buy dollars from Nigerian banks?

To be eligible, you must meet the following requirements and provide the following documents:

• You must not have been paid a total of $4000 or its equivalent within the quarter
• PTA/BTA applicants must provide a duly completed Form A, a valid Nigerian Passport with a valid visa, an international return ticket with a travel date not more than 14 days from the date of PTA/BTA purchase.
• BTA applicants are required to present document of Incorporation/Registration, Letter of Invitation from a business partner abroad.
• PTA/BTA is valid for journeys of 5 hours minimum flight time originating from Nigeria. Countries within the West African Region and Cameroon are exempted from PTA/BTA
• For school fees, applicants should be Self or a parent/guardian with a valid BVN
• Admission letter, payment invoice and a duly completed Form A and Applicant’s valid ID card are required for school fees

FAQs

Where can I purchase foreign exchange?
According to the new CBN policy you should be able to buy dollar at any bank branch, but this will be subject to availability and individual banks might direct customers to a special branch if the need arises.

Do I have to own an account with a certain bank to buy foreign currency from them?
No, banks are required sell to both account holders and walk–in customers. But it does make things easier to buy from your bank.

Can a traveler buy all three currencies at the same time?
Absolutely, as long as the quarterly limit for PTA/BTA is not exceeded. The US dollar is the base currency.

Are children entitled to buy foreign exchange?
Foreign exchange can be purchased by holders of Nigerian passports who are 18 years and above

Can I still buy foreign exchange, even if I do not want up to my maximum travel allowance?
Yes you can. The minimum purchase amount is $100 or it’s equivalent in other currencies. You can buy any amount between 100 and 5,000 dollars.

Do Nigerian banks deal in all the currencies in the world?
At this time, most banks only deals with the three major world currencies, US Dollar, British Pounds and the Euro. If you’re traveling to any country outside the United States, UK and Europe, it is advisable that you buy the dollar which you can easily convert to the currency of where you are going.

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The Central Bank of Nigeria has announced a ban on forex sales to Bureau De Change operators in the country instead opting to sell dollars and other foreign currencies directly to commercial banks, that will in turn sell to Nigerians.

This will make it more difficult for Nigerians to access hard currency from the black market which has typically operated with very little oversight.

Customers must now go to their bank, present proof and documentation to get approval to buy hard currency. Each transaction will have to be vetted and the CBN will determine how much dollars should be sold to Nigerians on a case-by-case basis.

CBN Governor, Godwin Emefiele, made this announcement after the Monetary Policy Committee two-day meeting in Abuja on Tuesday.

The CBN says it stops the sales of dollars to BDC operators because the parallel market has turned into a channel for financial frauds.

The apex bank also says that it will no longer be processing any new applications for Bureau De Change licence in the country.

Mr Emefiele added that now, the Weekly sales of foreign exchange by the CBN will henceforth be sold direct to commercial banks.

“We are concerned that BDC operators have allowed their operations to be used for graft,”

“In particular, we have noted with disappointment and great concern that our Bureau De Change operators have abandoned the original objective of their establishment, which is to serve retail end users who need $5,000 or less.

“Instead, they have become (illegal) wholesale dealers in foreign exchange to the tune of millions of dollars per transaction.”

He further claims, international bodies, and some embassies and donor agencies, are also involved in the illegal forex transactions that makes it difficult for foreign money to enter Nigeria.

The apex bank chief added that instead of the organisations to use the official Investors and Exporters (I&E) window, Nafex, they channel forex through the black market.

Mr Emefiele says they’ll “deal ruthlessly” with any bank that allows illegal forex dealers to use their bank and they will report international organisations that disobeys the order to their regulators.

This is not the first time that the CBN will ban sales of dollars to Bureau De Change, in 2016 the Central bank at a press conference announced a stop to sales of dollars to BDC operators but they later reversed the decision.

BDC operators react, says CBN ban on forex sales will make Dollar strong, Naira weak

Bureau De Change operators are companies with licences from the CBN to trade and change currency to the public and they’ve reacted to CBN ban on their operations.

CBN says the ban will ‘stabilize’ the Naira, yet this move is forcing some Nigerian businesses to reason how they will buy and keep plenty foreign currency like US dollars and Pounds sterling, because of fears that demand for them will rise.

Mohammed Abdullah, who is an official BDC operator agrees that demand for foreign currency in Nigeria will cause their prices to go up and Naira to go down.

“It can’t make the Naira strong… what they [CBN] did didn’t make any sense,” Abdullah told the BBC.

Like Abdullah, other BDC operators believe that the CBN ban on their businesses cannot hold for long.

“Do you know how many registered operators there are? Like 7000 and each one has like 5 staff. So all of them will now lose their jobs!” Abdullah who is based in Lagos complained.

BBC investigation reveals that the prices of Naira against foreign currencies is still unchanged after day one of the ban.

As at Wednesday 28 July, to buy $1 from BDC, you will need to drop N500 – the same amount it sells for on Tuesday when CBN announced the ban.

Another currency exchange operator Jubril Zubairu says “although the exchange rate is still unchanged, it will soon happen. In some days,” he said, Dollar will begin to go up against the naira.

Founder of finance website Nairametrics, Ugo Obi-Chukwu highlighted that the ban will reduce the of places where customers can exchange currency since now only banks remain as the official exchange place.

“BDCs that are no longer available, will automatically put more pressure on bank branches,” Obi-Chukwu told Nairametrics as he warns about the situation. He also warns that banks cannot cope with all the rush that will be coming their way unless they automate their exchange service.

Even if the CBN had the rightcorrect intentions to stabilize the Naira, this announcement that many were not expecting is likely to create panic and shock, and with all the challenges it will cause, the Naira might not survived as they hoped.

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The naira closed at 411.25 — the last closing rate for the naira, despite hitting N419.75 to a dollar during the intra-trading day.

Having traded within a band of 380 and 381 to the dollar since July last year, the naira hit a record low of 419.75 against the dollar on Friday.

Why is the Naira always depreciating against the Dollar?

Nigeria’s main foreign exchange earnings come from crude oil which account for almost 75% of dollars coming into the country. As importers and foreign investors seek to repatriate funds, it piles pressure on the naira causing the currency to depreciate.

What Effect Does This Have?

The lower rate for the Naira could have a huge effect on the nation’s economy. A strong national currency allows importers more purchasing power, while a weak currency makes it more expensive to import goods. Given how reliant Nigeria is on imports, a weak Naira makes a vast range of products more expensive for the consumer. On the other hand, it becomes cheaper for other countries to purchase goods from Nigeria.

The different trading rates have attracted warnings from the World Bank, who have asked that the rates be unified in order to attract investment.

The Governor of the Abuja based bank, Godwin Emefiele, had in February confirmed that the naira has depreciated at the official market to N410 against the dollar as the government tries to boost earnings from crude sales, Nigeria’s main export.

On Friday, The CBN removed the exchange rate of N379/$1 from its website homepage. The exchange rate displayed on the website was usually the reference point for the official exchange rate of the country. The last data entry for the exchange rates show May 10.

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