Let me try to show the Two sides to the coin on this inability to use Nigerian cards for international transactions. Just to put it straight in case this is the only post you will or have read from me regarding an economic issue, I am NOT a fan of the CBN policies in the last 18months and I have openly, publicly and privately spoken against them and even written them directly.
However, the noise by a few people on this issue needs to be addressed properly.
Lest we all forget, we run an economy with active exchange controls that have been in existence since my memory started functioning. So, before we all start screaming blue murder, let’s find out what exchange controls mean in the first place. but to put it simply, the government controls how you exchange the local currency for foreign currency
Having done that, let me deal with the “legit” small businesses who will suffer inconveniences that are routine for the “legit” large businesses. So a lot of traders need to swipe cards abroad to import goods and he no longer can; this is truly sad and frustrating, but pray tell, how was he importing before Nigeria had debit cards that could be used abroad. Mind you, this debit card usage abroad is only a few years old! It will now merely be inconvenient and to import anything, he would now have to fill all the form M related paper work and buy FX from a bank, like we do for every other import in any other exchange controlled environment. Wait!!! did i hear you say the banks don’t have fx to sell? Oh dear, didn’t realise you knew that – so if you know they don’t have fx to sell, where did you want them to get the fx you force them to sell by using your card abroad? or you didn’t realise it’s the same fx?
Now there’s the issue of school fees and pocket money which is extremely important. fear not, NO, you don’t have to bring your precious children back from Harvard and Oxford to this god-forsaken-country’s-educational-system!! Instead of swiping cards to pay, all you have to do is to fill out the forms A and apply to your bank for the fx and when they have, they will provide (again, if they don’t have, how did you intend to swipe a naira card and it will spit out GBP or USD???). Of course, with a scarcity comes a queue and with a queue comes planning and considering that we all are last minute dot com people, planning 4weeks in advance is a near impossible task.
Incase you haven’t got the message, let me paint it clearer “NIGERIA DOES NOT HAVE FOREIGN EXCHANGE ANYMORE” and like any commodity that is scarce, you begin to ration. I do not like the fact, i do not support how we got here, i am against the fact the all the proactive measures to prevent this were not taken, but the fact remains – THIS IS WHERE WE ARE and we canot keep pretending and spending as if everything is ok.
in 2014, according to CBN, we spent about $5billion on business and personal travel. Now, the whole of Ghana where we have over 70,000 Nigerians schooling has only $5.4billion in their external reserves. Yes, in one year we blew on ajala travel the whole of Ghana’s reserves! And then another $3billion on education and medicals – Yes you may have spent it in naira, but the country, very unwillingly, vomited it from our USD foreign reserves. Perhaps if we can convince Harvard to take fees in Naira, I personally promise you, the ban on using your card will be lifted.
So, for once dear friends, put national interest above personal inconvenience because truth is, if we do not, we will still get here in a worse way. You will swipe that precious Naira platinum card in “the abroad” and it will be declined and then guess what, the ban will not come from CBN, but from all countries and airlines and stores – would you prefer to have a sign in all places abroad saying “NAIRA CARDS NOT ACCEPTED” – for where we are, it is one or the other.
The other side comes from the obviously legit question of “if we don’t produce and we can’t import, what do we do”? Well, I don’t have the answer in the short run, but certainly, focusing all our effort and resources on local production of as much as possible should be our priority. I could equally ask, “if we don’t produce and we don’t have USD, how do we import?”
My friends Abubakar and Odion and a few others have been trying to make these points and I only add to the many posts they have on this, perhaps if more of us who disagree with CBN policies rally to educate each other on why we have to amend all our way, perhaps that light at the tunnel will not be a train heading for us