ATMs Embargo on Nigerians in Diaspora: Why it should be Lifted
Ibrahim Ilyasu, PhD
“Everything changes but Change itself”
John F. Kennedy
The people of Nigeria living abroad are today under the sway of unprecedented anguish called MasterCard withdrawal ‘embargo’. This technically speaking, means that from 1st January 2016, Nigerian in diaspora will no longer use their MasterCard/Credit Card (or whatever it is) for online and offline transactions or make withdrawals from ATMs. This means they will never buy anything on Amazon, EBay, etc. or order anything online from a foreign website. This is incredible!
According to the Central Bank of Nigeria (CBN) the sanction is painful but inevitable measure taken as a result of dwindling foreign reserves and banks’ failure to settle dollar transactions arising from the use of MasterCard in foreign land. In other words, this restriction policy was initiated in good faith.
In the face of drastic fell of global oil price, it is critically urgent to figure out how to address the precipitous decline in forex earnings and by extension foreign reserves and the only viable alternative to preserve Nigeria’s reserve is to impose foreign currency curbs, said the CBN. Nevertheless, as soon as the reserves rise to anywhere between $50 billion to $ 200 billion, the sanction will be lifted. But no one is quite sure when. The proponents of ATM sanction also argue that the decision has become necessary as ATMs are widely used in phonies and shams, hence its operations must be blocked.
Now, let us quickly review these arguments. Automated Teller Machines (ATMs) were essentially introduced to serve as one of the effective channels for electronic payment. Undisputedly, e-payments have their downside (as shortcut for fraud, for example,) but their advantages, as a matter of fact, by far outweigh their drawbacks. E-Payments are cost and time effective as they reduce the time and cost needed to perform any transaction.
Let’s face it, Nigerian economy is in bad shape and the extent of that can only be imagined. It must be remembered that way back in March 2014 CBN issued circular directing all banks to install anti-skimming device at all ATM terminals to address the rising incidence of ATMs fraud. The ten thousand dollar question now is; what happened after that?
Rather than sanctioning ATM withdrawals per se, the CBN should have installed sophisticated technologies on their ATMs system that can forestall the trend and do whatever it takes to remain committed to the deployment and management of ATMs in line with global best practices. The CBN should also strategize on how to use anti-skimming device to minimize leakages and fraud, while at the same time serving their customers at efficient capacity to ensure that the Nigerian payment system complies with global payments standards. But to reject all these choices and block ATM usage abroad is doing nothing, and doing nothing, as President J F Kennedy once observed, is not an option. This decision is anything but bold and it speaks volume about the inefficiency of the CBN to successfully handle critical global financial issues.
While we appreciate the constraint the CBN is facing from law Forex inflow into the Foreign Reserves due to low oil prices, the sanctions imposed by the apex banks are way too extreme. If ATM card use abroad must be banned, it should be on politically expedient people instead of ordinary Nigerians who in most cases rely on it for their sustenance. Also, if it is true that ATM sanction is to combat fraudulent activities, the CBN can do that through BVN (which provides account details of Nigerians) without having to punish innocent masses for the sin of few corrupts. The measure is also a hard option for Nigerians schooling abroad who depend on their governments or parents to fund them.
By taking this decision, the CBN is sending wrong signals to the world investors and international community that they are out of touch with the reality of modern economy. They have closed international doors against Nigerians. Needless to say, many businesses now rely heavily on using online transactions to thrive. Beside, as we are living in digital age, this policy will only draw Nigeria ten years back. Put simply, this is a wrong policy at a wrong time.
Speak to any Nigerian leaving abroad and you will hear the amount of losses they incur whenever they make withdrawals using those MasterCards. You almost certainly lose from both ends. Predictably, this policy has come only to add salt to the injury. For the sake of clarity, I’m obliged to share my personal experience. Over the last three days I have made three withdrawals (one withdrawal per day). I had a withdrawal limit of taking just RM, 1000 per day. The exchange rate in Malaysia used to be around N52,000 per RM, 1000 per day, but this time it sky rockets to the rate of N 63,658.55 per RM 1, 000. For every withdrawal I discovered that I lost RM 382 (N 24, 317) to ATMs at both ends. Collectively, I’ve lost N72, 952 (RM 382 X 3 = RM1, 146) to cash machines for withdrawing just RM 3,000. Just do the math, why on earth will I lose RM 1,146 just for withdrawing RM 3,000. To say this is outlandish is an understatement. Hasbunallahu Wani’mal Wakil. What the hell is going on in the CBN?
That Nigeria now earns less from crude oil sales is not a subject for debate. As a matter of fact, past administration of Jonathan did not save for the rainy day when the oil market was booming to diversify the economy well enough to be a productive economy that can withstand shocks. When oil prices were at $128 per barrel many OPEC countries saved the windfall and built up their foreign reserves. For, example, Saudi Arabia had a $662 BILLION war chest, Russia had $371 billion, even war-torn Libya had $105 billion in foreign reserves. Nigeria had $30 billion. Countries need those foreign reserves to support their currency and avoid rapid devaluation. In Nigeria, the money was plundered and that is why we are now feeling the pinch.
Now that the mistake has already been made, Nigeria should look for viable alternative rather than unnecessary stoppage of debit card for foreign currency. To encourage production and exportation, the CBN can promote local manufacturers and finance activities just like the EXIM of the USA. This way more foreign currency will flow in and Nigerian forex trading will be improved and the quagmire of the dead economy will be turned around quickly.
President Buhari is not your fault, this is understandable. Nigerians elected president and not a magician; so he cannot change everything within the blink of an eye. Both the Finance Minister and the CBN Governor are in the best position to explain this situation to Nigerians.I personally believe in the sincerity of purpose and honesty of the President to set this nation on tract. I also appreciate how he is determined to deliver on his promise on CHANGE. I always pray for him.
Certainly, life belongs to the living, and he who lives must be prepared for changes. Change, according to philosophers, is the law of life. The fact that things are the way they are, they will not stay the way they are. Everything flows and nothing stays still. Hence, all things must change to something new, to something strange. Hence, we as a people should welcome change because there is a certain relief in change, even it be from bad to worse. Change is inevitable in progressive society, because “progress”, as George Bernard Show observes, “is impossible without change, and those who cannot change their minds cannot change anything”.
Mr. President, Nigerians understand perfectly well that the price of CHANGE you were voted for is costly and they are ready to pay for it and that is why you are there. But please do something urgently to holistically address this burning issue and lift the sanction. Readjusting is a painful process, but most of us need it at one time or another. Nonetheless, ATM withdrawal sanction, is way too much too bear.
Ibrahim Ilyasu, PhD