In continuation of the effort of the Central Bank of Nigeria (“CBN”) to increase foreign exchange (“FX”) availability in the Nigerian Foreign Exchange Market, and the need to ease the difficulties encountered by Nigerians in obtaining funds for some invisible transactions, the CBN, on February 20, 2017 issued “Guidelines for the Operationalisation of the New Policy on PTA and School Fees” (the “New Guidelines”).1

Prior to the issuance of the New Guidelines, the CBN, on or about June 20, 2016, collapsed the autonomous foreign exchange market and the interbank foreign exchange market into a single flexible foreign exchange market in Nigeria, such that the CBN began to operate a single market structure through the autonomous/interbank market under the Interbank Foreign Exchange Market (“Interbank Market”). The effect of this was that CBN would only participate in the Interbank Market from time to time through secondary market intervention mechanisms such as the sale of FX to Authorized Dealers2 on a wholesale basis or to end-users through Authorized Dealers on a retail basis. This was immediately documented via the Revised FX Guidelines for the Operation of the Nigerian Interbank Foreign Exchange Market June 2016 (the “Revised FX Guidelines”). The sale of FX was and continues to be required to be backed by visible and invisible trade transactions, or evidenced by investments.

In a bid to promote the competitiveness of the Interbank Market and strengthen the value of the Naira, the CBN, via the Revised FX Guidelines, introduced the OTC FX futures which may be sold by Authorized Dealers to end-users on the back of visible and invisible trade transactions or evidenced by investments.

This briefing therefore sets out the following new measures introduced by the New Guidelines:

FX Sales

The CBN will now commence the sale of FX on a weekly basis to banks classified into merchant banks, small banks, medium banks and big banks. The sales shall be for Personal Travel Allowance (“PTA”) and School Fees. The New Guidelines further provide that the sale of FX for these purposes shall be done every Tuesday.

A. Sale of FX for PTA

With respect to PTA, the New Guidelines provide the conditions that should apply for sales for PTA. The conditions are that:

a) Applicants should be eighteen (18) years of age and above;

b) Applicants/beneficiaries must be holders of Nigerian Passports;

c) Applicants are to be account holders in the chosen bank;

d) PTA will only apply to journeys of not less than five (5) hours of flight time;

e) The flight must have originated from Nigeria;

f) Sale of FX for PTA shall be for travel undertaken not more than fourteen (14) days from the day of the purchase of PTA;

g) The applicants for PTA are to present a verifiable Bank Verification Number (“BVN”) to their bankers; and

h) Applicants for PTA will only be entitled to US$4,000 per quarter.

B. Sale of School Fees

With respect to sale of FX for school fees, the following conditions apply:

a) Remittances shall be made directly to the school’s account;

b) Applications shall be for not more than US$15,000.00 or its equivalent per term/semester;

c) Applicants shall be recognized parents/guardians;

d) Applicants are to provide their BVN to their bankers; and

e) The applicants are to present the following:

(i) Duly completed Form “A”; (ii) Admission Letter from the School; and (iii) Invoice from the school.

Report on Transactions

The New Guidelines requires all banks to submit a daily return of their sale of foreign exchange for PTA and school fees to the CBN. The report referred to in the New Guideline must reach the Director, Financial Markets Department, on or before 4 pm daily in soft and hard copies. The report must contain the applicant name, amount purchased, applicable rate (USD/NGN), purpose of purchase, beneficiary name and passport number.

Pursuant to the New Guidelines, banks that fail to comply with the New Guidelines will be sanctioned. The New Guidelines are however silent on the sanction(s) to be placed on defaulting banks.


It is apparent that the Revised FX Guidelines and the New Guidelines were passed by the CBN with the objectives of:

(i) Increasing FX availability in the Nigerian Foreign Exchange Market, and the need to ease the difficulties encountered by Nigerians in obtaining funds for some invisible transactions;

(ii) Promoting funding of the Foreign Exchange Market;

(iii) Putting in place controls to block leakages;

(iv) Improving price transparency; and

(v) Removing uncertainty and stimulate the inflow of foreign investments into the Nigeria.

It was widely expected, although with some reservations, that some of the innovations introduced in the Nigerian Foreign Exchange Market will not only ensure liquidity and access to FX but will also deepen the Nigerian financial market. In furtherance of these objectives, a few days ago, the CBN carried out wholesale interventions in the Interbank Market by providing a total sum of circa Three Hundred and Seventy Million United States Dollars (US$370,000,000) to twenty-three (23) banks to meet the visible and invisible requests of their customers3. We understand that the aforesaid CBN intermediation in the Interbank Market was the first wholesale intervention aimed at easing the pressure of access to FX by Nigerians who intend to meet obligations that fall under visible and invisible transactions. Whilst the wholesale intervention of the CBN4 would substantially ease the FX pressure for invisible and visible transactions, the challenges with respect to accessibility of FX and a stable exchange rate are still to be resolved.

The current malaise being faced in the form of accessibility to FX and the constant increase in the exchange rate underscores the need for the Federal Government of Nigeria to put in place certain policies that will facilitate Nigeria’s efforts to generate appreciable FX from alternative sources other than oil exports. It is imperative to ensure that the Nigerian economy is productive and manufactures goods for exports; the resulting effect will be that the Foreign Exchange Market would then operate like any other market in the economy with a floating rate basically determined by market forces and truly reflective of the state of the economy.

Whilst the measures introduced by the Revised FX Guidelines and the New Guidelines are welcome and provide some respite and immediate solution to the restricted access of FX, the search for a lasting solution to the dilemma in the form of FX challenges persists and will remain so long as the Nigerian economy is not productive, manufacturing or adding value to the production chain. The measures introduced in the new foreign exchange regime assume that the Nigerian economy is productive, manufacturing or adding value to the production chain. Based on that assumption, the exportation of the produced commodities would be able to earn FX, which would then be ploughed back into the economy. However, that assumption