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Beginning from today, Nigerian banks will completely stop or reduce the amount customers can spend abroad using debit cards in order to limit foreign currency settlement risk, according to a Reuters report quoting two lending institution in the country.
Africa’s largest economy is facing dollar shortages because of the sharp fall in the price of oil, Nigeria’s main export, and domestic banks are trying to avoid transactions with hard currency.
Stanbic IBTC Bank, the local unit of South Africa’s Standard Bank, said it will halve the spending limit for offshore card transactions to $500 per month from Monday and will limit cash withdrawals to $100.
Another top tier lender Zenith Bank said it will temporarily suspend the use of debit cards abroad for cash withdrawals and cut the monthly spending limit abroad by more than half to $200.
“This review is in response to today’s economic realities,” Zenith said in a notice, advising clients to request prepaid dollar cards.
Other lenders — Ecobank and Fidelity Bank — have also lowered withdrawal limits for individuals while abroad.
Such moves have previously been at the behest of the central bank, but it was not clear if the regulator was behind the latest action. The central bank did not respond to a request for comment.
The Central Bank of Nigeria is struggling to conserve dollar reserves that are down 19% from a year ago following the slide in revenue from crude oil export.
It depreciated the currency, last week, on the official market forcing the naira to weaken on the black and over-the-counter spot markets – a clear signal of the naira’s poor health as dollar becomes even more scarce.
