CBN Clarifies Memo On Foreign Exchange

The Central Bank of Nigeria has advised Deposit Money Banks to stop misguiding their customers, stating that its foreign exchange manual has not changed.

The CBN had on February 22 said that USSD cash transfers to domiciliary accounts cannot be withdrawn. Only cash deposits into a domiciliary account can be withdrawn in cash.

The development led to different interpretations by the general public as Deposit Money Banks also reacted by restricting amount payable to customers domiciliary accounts.

However, the apex bank further clarified through a circular released Monday stating that all, “ordinary domiciliary account holders can utilize cash deposits not exceeding USD 10,000.00 or its equivalent by telegraphic transfers to fund eligible transactions.”

The CBN said that operations of domiciliary accounts as contained in its Foreign Exchange Manual Memorandum 25 provisions had not changed. 

Reacting, Uchenna Uguru Onyike, a Lagos based financial expert told THE WHISTLER that the clarification was a welcome development, adding that if the rumours were true, it would have crippled business activities in the country.

Onyike said that “When you tell a businessman who imports from China, US or Germany to transfer based on the inflow of FX then you want to invariably cripple his business because those businesses have less FX inflow as they do their business in the domestic market.

The analyst added that it would have led to the hike in the demand for USD transfers through the parallel market, adding it would have led to higher transaction rate.

According to Onyike, the development would have led to a technical devaluation of the Naira, as businessmen would have paid more in Naira to get the same USD transferred to their clients abroad.

He said so many financial transactions would not be captured in the national income accounts, as most of the USD would not go through the right channel so as to be appropriately captured.  

He added that the policy would have exposed people to lots of fraudulent transactions, and made it difficult for those schooling abroad to make payments.

“Under a similar policy in 2016, a lot of students had their school fees paid from ‘yahoo yahoo’ accounts simply because their parents could not access the USD to pay for them, at the end of the day some were interrogated by the FBI for crimes they did not commit,” he said.