Banks Reduce International Spending Limit On Naira Cards To $20 Monthly

Nigerian banks cut the dollar spending limits on local currency cards to free more resources to fund imports after the central bank signaled it will stop foreign-exchange sales to banks. 

United Bank for Africa Plc stopped the use of naira card to withdraw dollars from automated teller machines outside the country or make international payments at point of sale devices.

Zenith Bank Plc said it “temporarily suspended” the same transactions on ATM and POS devices. It cut spending limit on web transactions using naira cards to $20 a month from $100, citing “today’s economic realities” in a note to customers. First Bank of Nigeria Ltd. set the limits on its naira Mastercard and naira credit card to $50 monthly.

The Central Bank of Nigeria said last month it will stop selling foreign currency to lenders by the end of the year to encourage them to source their own dollars and also support government’s target to lure $200 billion of inflows yearly by 2025.

The regulator has struggled to fulfill its dollar obligations to portfolio investors since 2020 after oil prices collapsed. The International Monetary Fund estimates that the central bank has a backlog of $1.7 billion in unmet demand to investors.

While oil exports account for about 90% of foreign-exchange earnings, higher prices have failed to boost foreign reserves for Africa’s largest crude producer due to lower than normal output even as part of the export barrels go to fund gasoline imports for local consumption at subsidized prices.