The introduction of an electronic foreign exchange request should simplify the process of accessing the greenback.
The recently introduced electronic exchange (forex) application has been described as a major tool to facilitate access to forex for travelers, SME operators, those who pay tuition fees, health bills and others. who need the greenback for genuine transactions.
With the new policy, Nigerians can now apply for forex online, with the rollout of the electronic form “A” which has sped up requests for PTA / BTA, medical fees, education and other remittances. .
The new policy was disclosed in a circular titled “Automation of Form ‘A’ on Trade Monitoring System,” introduced last month, which was signed by CBN Trade and Trade Department Director Dr Ozoemena Nnnaji.
According to the central bank, all hard copies of the “A” forms created on or before November 2, 2021 (before the start of the electronic “A” form) must be used within 15 working days of the form being created.
An “A” form is an application form designed by the CBN to pay for service transactions (invisible commerce).
The form allows clients to purchase currencies at the CBN or interbank rate to make payments for qualifying services as predetermined by the foreign exchange manual.
The electronic form “A” replaced the hard copy as of November 30, 2021.
According to the central bank, these customers were required to pay a fee of 5,000 naira as a fee per electronic form “A” declaration.
The circular reads as follows: “This is to inform all authorized resellers and the general public of the deployment of electronic form” A “. As a result, the electronic form “A” will replace the hard copy of the form “A” for invincible transactions (PTA / BTA, medical expenses, education, other remittances, etc.) as of November 30, 2021.
“Therefore, all Authorized Resellers are required to ensure that processing of Form ‘A’ will only be done electronically on the Trade Monitoring System accessible at www.tradesystem.gov.ng.
“The general public is required to obtain a valid Bank Verification Number (BVN) from its authorized dealer banks. The BVN is a prerequisite for customer access to the trading system for the application of the electronic form “A”.
“Electronic Form ‘A’ is web-based and allows the general public to create the form from their office / home and submit it to the authorized reseller’s bank.
“A fee of 5,000 naira as a fee per declaration of electronic form ‘A’ is applicable from November 30, 2021 and onwards. There will be a direct debit from the current account of the processing bank for each declaration which is expected. be recovered the fees charged to the customer by the bank.However, customers for electronic form “A” should be segregated from other bank charges.
“All paper copies of forms” A “drawn up by November 2, 2021 (before the start of electronic form” A “) must be used within 15 working days of the establishment of the form.
“For the avoidance of doubt, all prepared hard copies of the“ A ”forms for which disbursement has not been made within the 15 working day transition period will be deemed canceled.
“All authority concessionaire banks are urged to keep their customers informed of developments in compliance.”
Analysts noted that the policy would help make forex and related services more accessible to clients of Nigerian banks.
In recent times, there has been a halt to the rapid depreciation seen in the black market.
CBN Deputy Governor, Corporate Services Branch, Mr. Edward Adamu, who revealed this, noted that “the initial depreciation caused by the panic in the parallel market gradually gave way to real market forces.”
He added, “Against the backdrop of tight liquidity management and the recent change in forex management strategy, the naira exchange rate has remained stable since the last investor and exporter (I&E) window adjustment. .
“Apparently, the revised foreign exchange management strategy, which excludes exchange bureaus (BDCs) from direct sales, is working because a substantial part of the demand for foreign currency has migrated to the counter of deposit banks. that this trend will continue in the coming months. months as confidence in the amended framework grows. “
CBN Governor Godwin Emefiele had said the umbrella bank was prepared to approve a legitimate foreign exchange request that exceeds the approved transaction limit if those requests meet stipulated requirements.
According to him, the CBN was ready to approve requests from commercial banks to go beyond the caps if it was proven that the additional demand for foreign currency was for legitimate purposes.
He said: “Indeed, I want to put it down; If the amount you want is even greater than the accepted limit and we believe that the reason you are making these requests is legitimate, your bank will tell us about it and we will give you more than even the limit. “
He had also insisted that the central bank’s investor and exporter window remains the main market that anyone looking to source or sell currency should go to.
While urging customers to visit their banks for their foreign exchange needs, the Governor of the CBN said, “The only exchange rate that I recognize today in the Nigerian forex market, which is the dominant market, remains the window for investors and exporters (I&E).
Emefiele, recently reiterated the need for a broad structural reform this year to accelerate the country’s economic growth.
He stressed that significant structural reforms were needed to ensure that long-term growth paths exceed potential.
The governor of the CBN noted that as corporate sentiment improved, following various supply-side support by the umbrella bank and the orderly implementation of macroeconomic policies, he expected to that inner fragility decreases with mild ripple effects on well-being and livelihoods.
He said: “Our medium-term goal is to accelerate growth above the historical average. Economic activities could reach pre-pandemic levels if the resilience of non-oil activities (especially the agricultural and manufacturer) receives a continuous impulse. “
Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) member Professor Mike Obadan, in a recent article, explained that forex is relevant in the context of global trade, payments and currency flows. capital entering and leaving a country. . This, he stressed, constitutes a major component of a country’s external reserves which, according to the International Monetary Fund (IMF), consist of “official foreign public sector assets that are readily available and controlled by the authorities. monetary, for the direct financing of imbalance payments, and by directly regulating the extent of these imbalances, by intervening in the foreign exchange markets to affect the exchange rate and / or for other purposes “.
For this reason, the Central Bank of Nigeria Act 2007, Section 24, mandates the Bank to maintain external reserve holdings of gold coins or bullion, balances in banks outside of Nigeria, Short-term foreign treasury bills and medium-term securities, IMF Special Drawings Rights (SDRs), etc.
The CBN Act of 2007 directs the Bank to “do its best to maintain external reserves at levels considered by the Bank to be appropriate for the economy and monetary system of Nigeria”.
“In light of this, the CBN has endeavored to fulfill this mandate using supply and demand management strategies, in particular forex conservation and control measures as well as measures to ensure a adequate supply of foreign exchange.
“This is especially true because forex is a scarce resource that must be managed effectively if the country is to achieve macroeconomic stability and avoid chronic balance of payments and external reserve problems.
“It should be emphasized that it is only forex, in the form of convertible currencies or internationally acceptable currencies, and not the naira, that can be used for international transactions,” Obadan added.
The professor of economics and president of the Goldmark Education Academy, noted that for some time now there have been forex problems in the country, which predate the current administration, stating that over the years, real efforts by the federal government to make progress on these have tended to be undermined by exogenous shocks over the past five years that pushed the economy into recession in 2016 and 2020.
Therefore, in order to stabilize the foreign exchange market and reduce the pressure on the naira exchange rate, it is necessary to move away from the faulty model of economic management of the country of the past.
Obadan, also called for a revival and reconstruction of productive sectors of the economy to achieve higher capacity utilization and productivity, and competitive manufactured exports; the government strongly encourages local refining of petroleum products for both domestic consumption and exports; as well as strong and effective oversight of the foreign exchange market by the monetary authority to control the return of currencies from deposit banks to the parallel market.