The Central Bank of Nigeria (CBN) plans to introduce stringent measures on the purchase of foreign currencies through Bureau De Change (BDC) operators, with a specific focus on transactions related to overseas education and medical expenses.
As part of the apex bank’s revised regulatory guidelines for BDCs in Nigeria, there will be a cap on foreign currency purchases for school fees at $10,000 per customer annually.
This process requires the transaction to be conducted through the BDC’s domiciliary account with a Nigerian bank, ensuring direct payment to the educational institution.
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The proposed guidelines read:
- “BDCs may sell foreign currency up to the equivalent of USD10,000 to a customer for school fee once a year. Such fee, which shall be transferred from the BDC’s domiciliary account with a Nigerian bank, shall be paid directly to the school.”
It also stipulates that such transactions must be accompanied by a set of documents: a duly filled out e-Form A, proof of admission or course registration, the educational institution’s bill or invoice, and, for postgraduate studies, a copy of the undergraduate degree certificate or an officially verified statement of results.
$5000/year Limit on Foreign Medical Bills
In addition to educational fee regulations, the CBN is implementing a limit of $5,000 per annum for foreign currency transactions concerning medical bills abroad.
Similar to the educational fee transactions, funds for medical bills will be transferred directly from the BDC’s domiciliary account to the medical facility, supported by comprehensive documentation.
This includes a completed e-Form A, a referral letter from a recognised specialist doctor or hospital in Nigeria, valid travel documents, and a letter from an overseas medical professional detailing the cost of treatment.
More Insights
- These initiatives are part of a broader strategy by the CBN to mitigate the challenges in the foreign exchange market attributed to significant outflows for foreign education and medical tourism. CBN Governor Yemi Cardoso pointed out that approximately $40 billion has been channelled into these sectors, contributing to the Naira’s depreciation beyond N1,600 in the official market.
- To conserve foreign exchange and protect the Naira’s value, the CBN revised operations for International Money Transfer Operators (IMTOs), restricting their services to inbound transfers with mandatory Naira payouts. This move impacts major IMTOs, including Western Union and MoneyGram, and is among several measures aimed at stabilising the foreign exchange market.
- The CBN also directed that Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) no longer be issued in cash but through electronic means. However, the revised guidelines propose limiting cash transactions for buying and selling foreign currencies through BDC operators to a maximum of $500, with any amount above this threshold requiring digital settlement.