The Central Bank of Nigeria (CBN) has introduced a significant policy shift, instructing authorized dealer banks to discontinue the payout of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) in cash. Instead, these travel allowances must now be processed through electronic channels, which include debit or credit cards.
This directive, spearheaded by Dr. Hassan Mahmud, the Director of the Trade and Exchange Department, aims to enhance transparency and stability in the foreign exchange market while addressing forex malpractices.
The new policy reflects the CBN’s dedication to enforcing compliance and embracing electronic means for accessing travel allowances. This marks a pivotal shift in how foreign currency transactions are managed for travel purposes.
According to the circular issued by the CBN, it states, “Authorized Dealer Banks shall henceforth effect the payout of PTA/BTA through electronic channels only, including debit or credit cards.” The circular emphasizes that cash payments for PTA/BTA are no longer permitted, underlining the CBN’s commitment to fostering a transparent and stable foreign exchange environment.
The move comes in the wake of Nigeria’s foreign exchange challenges, with CBN Governor Yemi Cardoso attributing a significant portion of these challenges to the substantial amounts spent on foreign education and medical tourism. In a presentation to the House of Representatives, Cardoso disclosed that approximately $40 billion had been invested in these sectors, contributing to the depreciation of the Naira to over N1,400 in the official market.
To address forex scarcity and protect the Naira’s value, the CBN has implemented changes to the operations of International Money Transfer Operators (IMTOs). The new regulations restrict IMTOs to inbound transfers only and mandate that international transfers be paid out in Naira. This policy has a significant impact on major IMTOs, including Western Union and MoneyGram, forming part of broader efforts to stabilize the foreign exchange market.
As the CBN continues to implement measures to safeguard the country’s foreign exchange reserves and enhance the stability of the Naira, the shift towards electronic channels for travel allowance payouts stands out as a strategic move in fostering transparency and efficiency in foreign currency transactions.
