CBN Bans Cash Payments for Travel Allowances, Mandates Electronic Channels

The Central Bank of Nigeria (CBN) recently unveiled significant measures aimed at stabilizing the Naira’s value. One key initiative involves requiring International Oil Companies (IOCs) to repatriate 50% of their revenue to Nigeria, instead of the previous practice of remitting all earnings abroad. This move is part of efforts to increase liquidity in the Foreign Exchange (FX) market and prevent the Nigerian economy from losing out on crucial foreign exchange.

Furthermore, the CBN has discontinued the practice of providing cash Personal Travel Allowance (PTA) and Business Travel Allowance (BTA), opting instead for digital payment methods. This decision is aimed at enhancing transparency in the allocation of these allowances and ensuring that only legitimate travelers benefit from them.

Dr. Hassan Mahmud, the Director of Trade and Exchange at the CBN, issued two separate circulars detailing these measures, which were distributed to dealer banks. Under the new policy, IOCs will now be required to keep 50% of their forex proceeds in Nigeria for at least 90 days before repatriating them abroad. This change is expected to boost Nigeria’s foreign reserves and stabilize the Naira.

The CBN’s directive also includes stringent documentation requirements for banks handling these transactions. Banks are required to obtain the CBN’s approval for repatriation, enter into a “Cash Pooling” agreement with the parent entity of IOCs, and provide evidence of the source of foreign exchange inflow, among other requirements.

Regarding the issuance of PTA and BTA, the CBN has mandated that these allowances be issued through electronic channels only, including debit and credit cards. This move is in line with the bank’s commitment to promoting transparency in the FX market and preventing foreign exchange malpractices.

Vanguard News