CBN stops dollar cash payments for foreign personal, business travels

The Central Bank of Nigeria (CBN) has announced a significant policy change, directing all authorised dealer banks to cease the payout of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) in cash.

Instead, these allowances must now be processed through electronic channels, including debit or credit cards.

This directive, signed by Dr. Hassan Mahmud, the Director of the Trade and Exchange Department, aims to bolster transparency and stability in the foreign exchange market while curbing forex malpractices.

The policy underscores the CBN’s commitment to enforcing compliance and adapting to electronic means for accessing travel allowances, marking a pivotal shift in how foreign currency transactions are handled for travel purposes.

The circular read: “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)

“In line with the Bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards.

“For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted.

“Authorized Dealers and the general public are hereby to note and comply accordingly.”

The Central Bank of Nigeria’s (CBN) Governor, Yemi Cardoso, has attributed the significant foreign exchange challenges facing Nigeria to the substantial amounts spent on foreign education and medical tourism. In a presentation to the House of Representatives, Cardoso revealed that around $40 billion has been invested in these sectors, contributing to the Naira’s depreciation to over N1,400 in the official market.

To address the forex scarcity and protect the Naira’s value, the CBN has revised the operations of International Money Transfer Operators (IMTOs), restricting them to inbound transfers only and mandating that international transfers be paid out in Naira.

This policy impacts major IMTOs, including Western Union and MoneyGram, and is part of broader efforts to stabilize the foreign exchange market.