When Bankers’ c’ttee blacklisted forex for fees, medical bills
Worried about the increased demand for foreign exchange for payment of schools fees and medical bills abroad, the Central Bank of Nigeria and commercial banks in the country have said they would no longer issue forex for such demands.
The latest decision which brings the list of prohibited item to 43 is expected to reduce the pressure on foreign currencies, while also encouraging patriotism among Nigerians.
According to the Bankers’ Committee the decision became necessary following the huge demand for forex for payment of school fees and medical bills which constitute 15 percent of foreign currency demand in the country.
Speaking at the end of the committee’s meeting in Abuja, Group Managing Director, Access Bank, Mr. Herbert Wigwe, said though there is no specific figure so far of how much is going as payment of school fees abroad, but reports from different banks indicated that it was over 15 percent of forex demands go for payment of school fees and medical bills thereby depriving other aspects.
“There are different numbers that are parading around about the number of children that go to schools overseas. Some people says about one million, now if we assume these children pay $20,000 or $30,000 or $40,000 per annum, the figures are staggering; it means that there is potential demand of $20bn or perhaps a bit more.
“We found different pressures of demand from different banks but generally never below 15 percent of the current forex that is being given to the banks. That, by any strength of imagination is significant.
“The deliberation we had today doesn’t agree on the final position but one thing that was clear was the fact that we should not allow these demands to crowd out the real sector investments because in any event, the money that you pay these school fees should be for the industries that operate locally.”
Speaking further on the restriction, director, Banking Supervision of the apex bank, Mrs. Tokumbo Martins, said that banks resolved that most of the foreign exchange demands would now be granted to develop the real sector.
Martins said that although the decision will be painful, it is a sacrifice Nigerians will have to make, have a long term development of Nigeria and the economy.
“The question is how we can prevent or reduce the crowding out of the real sector where there is increase in demand on the invisible. It is something that CBN is looking at and is something the Bankers Committee is looking at.”
Martin also revealed that 57 million Nigerians, representing 66 percent of the population, now have access to financial services.
She said the North East region remained the most challenging area when it comes to financial inclusion, she said the CBN would however deploy more resources to the region to increase the level of financial inclusion.
“One of the major issues we discussed is the issue of financial inclusion. It is very important for 170 million Nigerians to have some form of access to financial services and so I am happy to report that there has been substantial improvement.
Speaking further on the pressure in the foreign exchange market, the Managing Director, Standard Chartered Bank, Mrs. Bola Adesola, said there is need for Nigerians to make sacrifices and be patriotic in their activities.
“We need to focus on the real sector. That is the pain that we will need to go through today so that they would have long term development plan for the country.
“So our discussion around that is how we could prevent and reduce the crowding out of the real sector where there is increased demand on the invisibles and it is something the central bank and the bankers committee is looking at.”
The Managing Director Diamond Bank Plc, Mr. Uzoma Dozie, said the banking sector was currently working on how to increase the level of access to credit.