Nigerian Banks Reduce Forex Supply for Travel Allowance and School Fees — Several Nigerian Deposit Money Banks have recently cut the amount of dollars available...

Nigerian Banks Reduce Forex Supply for Travel Allowance and School Fees

Several Nigerian Deposit Money Banks have recently cut the amount of dollars available for Personal Travel Allowance and Business Travel Allowance to $2,000 per application, with a maximum of twice annually per applicant. This change was communicated to customers via emails from their respective banks, including FirstBank of Nigeria, which cited the limited supply of foreign exchange in the industry as the reason for the policy shift.

To mitigate the impact of the reduced forex supply, customers are advised to apply for PTA/BTA a few weeks prior to their trip, and funds will be disbursed within the week of the trip. Additionally, the application for upkeep is subject to a maximum of $1,500 per semester and limited to two semesters per session, while payment of school fees is subject to a maximum of $7,500 per semester and limited to two semesters per session. However, processing school fees and upkeep/maintenance requires a minimum of 16 weeks after the submission of documents along with the approved Form A at the branch.

Nigerians who have children and wards studying abroad prefer to use the Form A to access foreign exchange at the official rate, as this is much cheaper than sourcing dollars from the parallel market. However, in recent years, the scarcity of forex in the system has led DMBs to steadily reduce the amount of dollars that customers can access for PTA/BTA.

Banks have also introduced other measures to address forex arbitrage such as mandating travelers in need of dollars - PTA and BTA - to get travel debit cards. The CBN guidelines require that a company can buy up to $5,000 BTA per quarter, while an individual is entitled to $4,000 PTA per quarter. In 2021, the Bankers’ Committee announced that it would use digital processes to track forex transactions, stop fraudsters from abusing the system, and save scarce forex for the economy.

Last year, the Manchester Metropolitan University raised concerns about the payment of tuition fees for Nigerians studying in the United Kingdom, urging the CBN to speed up the payment of tuition transactions. The reduction in forex supply for school fees and travel allowance is expected to further exacerbate the challenges faced by Nigerian students studying abroad.

The recent policy shift by Nigerian banks to reduce forex supply for PTA/BTA and school fees will undoubtedly impact Nigerian travelers and students studying abroad. As the CBN and other stakeholders continue to work towards finding solutions to the ongoing forex scarcity, customers are advised to apply for PTA/BTA well in advance of their travels and explore alternative means of accessing foreign exchange.