The Central Bank of Nigeria (CBN) recently imposed a travel ban on bank chief executives between July 5 and August 15 to ensure their availability for questioning regarding the ongoing foreign exchange (FX) crisis. This move came in the wake of concerns that these executives were taking advantage of the decision to unify exchange rates, selling foreign exchange at inflated rates.
A confidential source revealed, “The beneficiaries of the naira crash are bank executives who became demi gods because they had dollars to sell.” The same source, requesting anonymity, pointed out that even before President Bola Ahmed Tinubu assumed office, bank chiefs were distributing forex as favors to their close connections, leading to significant delays for customers attempting to access forex directly from their banks.
“The delays experienced by customers in accessing forex directly from their banks were a direct consequence of this practice,” the official said.
It has also come to light that some bank executives were involved in illicit activities such as round-tripping and money laundering after the CBN released forex to the banks. The travel ban on bank managing directors, which was enacted on July 5, was only lifted last Tuesday after a meeting between Acting CBN Governor Folashodun Shonubi and President Tinubu.
According to a report by The Nation, a CBN spokesperson stated that the travel restrictions were not punitive in nature but rather an essential step for national duty. “The decision to unify the exchange rates led to the Naira’s decline and repeated crashes. The CBN provided regular briefings to the President on forex developments and the Naira’s value,” the spokesperson elaborated.
As part of its efforts to address the situation, the CBN had previously allocated weekly FX to Deposit Money Banks (DMBs) to meet genuine demands. It encouraged Nigerians with legitimate transactions to acquire FX from DMBs, accompanied by simplified documentation procedures. Banks were given 48 hours to fulfill their customers’ FX requests.
In a bid to facilitate transactions such as Personal Travel Allowance (PTA), Business Travel Allowance (BTA), tuition fees, medical payments, and SME transactions, DMBs were instructed to establish teller points at designated branches across the country. Additionally, banks were tasked with receiving cash deposits of FX from customers and widely publicizing the locations of these designated branches.
However, banks deviated from the FX policy by extending the processing time for accessing FX for international school fees paid via Form A from 48 hours to 120 days.
With the lifting of the travel ban, it appears that the CBN is taking measures to stabilize the Naira’s value. CBN spokesman Dr. Isa AbdulMumin expressed unawareness of the travel restrictions, while the decision to lift the ban indicates growing confidence that banks will adopt more responsible practices.
The travel ban’s controversial nature has been criticized for its potential to hinder business operations, but the CBN’s actions demonstrate a commitment to fostering greater transparency and accountability within the banking sector.