One cannot be certain whether Nigerians should celebrate or decry the recent Central Bank of Nigeria’s decision to reduce the existing annual limit on the usage of Naira denominated ATM cards abroadfrom $150,000 to $50,000, per person.
Nonetheless, the directive to banks in CBN’s circular of April 13,2015, may mean nothing to possibly over 98 percent of our country men, who have never seen the inside of an aeroplane, talk less of the luxury of spending foreign currency abroad. So why would the CBN enfranchise barely two percent of Nigeria’s 170mpopulation with such a privilege, when, every citizen, presumably, has an equal stake in our communal dollar reserves, which, inexplicably fund the consumption habits of a tiny minority of Nigerians.

Clearly,by reason of abject poverty, because of corruption and deliberate economic mismanagement, over 150 million Nigerians are excluded fromthe personal luxury to freely spend from our common Treasury’sdepleting pool of dollar reserves for any purpose.

Nonetheless, it is intriguing that the CBN initially set the earlier limit for convertible Naira ATM cards as high as $150,000. Pray, how many Nigerians earn N25m per annum, and is it conceivable that such people would carelessly spend their total income on overseas travel expenses without regard to other social and economic needs that have to be paid for back home? Consequently, it is probably more plausible to conclude that the CBN management consciously and deliberately left the door openby setting such a high cash withdrawal limit to induce and facilitate forex round tripping and capital flight and thereby support those substantial financial leakages, which serve the interest of the rentier class and a  tiny business elite.

It is no secret that in order to circumvent banking regulatory guidelines, several Nigerians have multiple accounts with different banks, and may therefore also possess a plethora of ATM cards. Thus, before the reduction of the withdrawal limits last week, a ‘business man’ with, say,10 ATM cards could transfer about $1.5m or almost N300m in one trip abroad. Furthermore, nothing stops this “business man” on return to Nigeria from obtaining a new set of ATM cards to repeat such cash movements over and over again in one year. Ultimately, if each dollar so transferred at official exchange rates, were re-priced in the black market with a N10 premium, our smart Alec would be over N15m richer with every trip. Regrettably, the proceeds of such transactions may also be used to fund the smuggling of those contraband consumer goods that jeopardise the operations of local industries. Worse still, the dollar exchange values may also inadvertently be diverted, ultimately, to fund the activities of terrorists and other miscreants who seek to destabilize our nation.

Indeed, with the prevailing climate of financial impropriety in our country, it is inconceivable that our monetary authorities failed to foresee the possibility of such extensive abuse of the Naira convertible ATM cards. However, the Managing Director/CEO of Union Bank, Mr. Emeka Emuwa, laboured to explain at a recent press briefing that “we did find that in a number of cases, people were using the cards in a manner that they were not expected to use them, and there have been cases of arbitrage (forex round tripping)”.So, in order to sustain stability,the bankers’ committee agreed that “the limit for the use of the Naira debit cards abroad should be reduced.” You may note that, Emuwa, made no mention of any identification of serial perpetratorsand their sources of income nor did he talk ofsanctions for those found culpable of gross misapplication of the Naira ATM cards abroad!

Nonetheless, the Bankers’ Committee’s spokesman’sobservation was obviously belated as the situation was already so bad, according to the Union Bank CEO, that the practice had become “a threat to the exchange rate stability of the Naira.” Nevertheless, in view of the several serious economic and social distortions caused by the convertible NairaATM facility, the new limit of $50,000may be seen as a halfhearted attempt to reducethe evident adverse consequences of abuse. Thus,it is pertinent to, once again ask, how many Nigerians earn N10m annually, and whether or not it is feasible that such people would also choose to spend their Grossannual salary package on overseas travel expenses and shopping.  Surely, developing countries with persistent foreign exchange challenges and widespread poverty, such as ours, would be expected to be more judicious in the management and application of available ‘scarce’ foreign reserves, for the greater good of more Nigerians.
Besides, what happened to the discipline and control associated with earlierprotocols for thebusiness or holiday travel allowances, which were available on application through banks to genuine travellersfor values between $5,000 and$10,000? 
Furthermore, the former process of Foreign Exchange allocations also provided for the remittance of school fees and related expenses for Nigerian students abroad, after the submission of relevant supporting authentic documentation torespective banks. However,with the subsequent introduction of the ‘laissez faire’ Naira convertible debit cardwith forex sales that required no formal documentation, it ironically became much easier,with the directive in CBN’s circular of September 26, 2013 to transfer $150,000 for no legitimate and genuine purpose while a whole “trunk” of papers and several follow ups to the bank would be required to obtain forex allocation for school fees and other living expenses for Nigerian students abroad.Similarly, it also became easier and quicker to obtain substantial forex values from an ATM card abroad than for an industrialist to source forex payment for raw material imports that would drive production.

Thus, in the face of our rapidly depleting reserves and the clear evidence of the abuse of the convertible ATM facility, it would certainly be more responsible and proactive to reduce the limit of travel allowanceson Naira ATM cardsto not more than $10,000 per annum, per person.  There is no reason why separate applications cannot be submitted to banks, as in the past, with supporting documents for any legitimate,additional forex requirements above this sum.

Curiously, the earlier Naira convertible ATM card limit of $150,000, was, an attempt according to CBN circular of September 26, 2013, to address the derogatory impact of the “high volume of dollars imported by Nigerian banks, so as to prevent money laundering.”Paradoxically, the existing annual limit for convertible Naira ATM cards before September 26, 2013 was just $40,000 per person.It is surprising, therefore, that part of CBN’s strategy against capital flight and money laundering was the increase in ATM limit to $150,000 and the parallel authorisation for banks to sell $250,000 weekly, to each of the almost 2,000 registered Bureau de change scattered throughout Nigeria. It is not clear how the CBN expected that this arrangement could restrain money laundering or redeem the Naira exchange rate. Indeed, who ever heard of the Bank of England funding the needs of the black market?

In reality, the CBN would continue to implement strategies that contradict its social and economic objectives, so long as it remains in denial that its monthly substitution of Naira allocations for dollar revenue is actually antagonistic to a stronger Naira and global best practice standards for inflation, and interest rates.