This article is broken down into a background story and then the actual step-by-step guide on how to buy dollars from the Central Bank of Nigeria. If you are not interested in the background story, please use the Table of Contents link above to jump to the step-wise guide.
Background story—Much ado about USD in NG
Buying dollars in Nigeria can be an extreme sport. The CBN simply doesn't have enough US dollars or FX to meet the demand from Nigerians—individuals, corporates, and importers/exporters.
Following the constant drop in crude oil (Nigeria's major export) price per barrel, the CBN has grappled with how to regulate the flow of dollars in the country. In 2020, the apex bank pegged the naira to the dollar—a strategy that experts have frowned upon—at ₦380 (from BDCs to Nigerians).
Today, the official exchange rate of the NGN/USD is ₦420. At this rate, everyone wants to buy, but no one wants to sell. This non-equilibrium has led to the rise of a parallel market where the local currency exchanges for ₦650—a premium of 55% over the official rate.
Well, none of all these is your business as a man-on-the-street. And if the CBN says they want to sell dollars to you at ₦420, then, by all means, buy.
In this article, I'd walk you through how to do just that—buy dollars from the CBN.
One way to buy dollars from the CBN is to apply for a Personal Travel Allowance (PTA), capped at $4,000 (£3,015). Individuals apply for a PTA when they are travelling out of the country. Thus, needing to spend in a foreign country. Other popular reasons Nigerians buy dollars from the CBN are for medical allowance or educational fees. So, for instance, young Nigerians migrating to the UK through the Global Talent Visa route are more than welcome to apply for the PTA.
As recent as last year, if you wanted to buy dollars from the CBN, you could walk into your bank branch with the required documents (more on this later) and fill out an application and get your FX in cash. There was some racketeering involved in this process where people book flights to obtain a ticket (one of the application requirements), obtain the FX, and then turn around to cancel that ticket and sell the FX on the black market. Thereby, earning an arbitrage for themselves.
So, for instance, someone can make close to a million naira (~₦920,000) by obtaining the maximum PTA at the bank rate and selling on the black market.
This further worsens the situation of dollars in the country for everyone. Now, the only way to apply for PTA is by submitting an application online on the centralised Trade Monitoring System (TMS) administered by the Federal Government and Central Bank of Nigeria.
How to apply for PTA in Nigeria
Here are the steps you need to follow to apply successfully for PTA from the CBN:
Step 1, Signup: If this is your first time, you should start by signing up to the Trade Monitoring System. Then, as an individual, you would need to sign-up with your BVN. Click "Continue". And then, the system will send you an activation email to the email address linked to your BVN. When you click to activate your account, you would be required to set a new password and that completes your signup.
Step 2, Login: Once you've signed up, you will login with your
password. Your username is the email address where you received the activation email. And your password is the password you set at the signup stage. When you login successfully, you land on a dashboard containing your user and contact details.
Step 3, Start Application: Once logged in, click on the "Form A" drop-down tab at the top and select "Start Application". There are four short sections to fill as part of your application—basic applicant information, trade services (purpose of funds, origination bank details, and
- Applicant Information: This comprises the applicant's basic information—Name, Phone, BVN, Email, and Address. The first four details are uneditable by you, as they've been pre-filled by the system based on the information they already have about you. However, the address is amenable.
- Trade Services
- Transaction purpose: There are three options—PTA, Medical allowance, and Educational fees. If you pick PTA, like most people, the default "Trade Category" is Tourism and Travel related services. You can either stick with that or change it.
- Beneficiary information: Who is going to receive the money? The applicant's BVN is already pre-filled alongside name and email all that's left is for you to add your phone number and Address.
- Request information: How much do you want and in what currency? There are nine currencies listed: Canadian Dollar, Euro, Japanese Yen, Naira, Pounds sterling, Riyal, Swiss Franc, US dollar, Yuan/Renminbi
- Travel information: Provide your International passport number, Destination currency, Airline name, Ticket number, and Route
- Bank Details: Basically, help CBN to know where to deduct the naira equivalent and where to disburse the FX to by selecting the Bank's name, bank branch, and entering your account number. You can opt-in to collect your FX as cash or have it transferred to an FX account. Most people just do cash.
- Attachments: Submit the required doc. They ask for a Valid Visa, Return Ticket. But you can also add your international passport bio-data page, as a form of bonus.
Step 4, Preview: Read through your entire application, edit for errors and clarity.
Step 5, Submit: When you click submit, you'd get a mail saying your Form A process has been initiated.
What to do after you've applied for PTA
After applying for PTA, you should wait till you get an email from tradesystem.gov.ng instructing you on the status of your application. If you are instructed to go to the bank to pick up your cash, ensure to carry along your travel document (in most cases, your international passport).
When you get to the bank, your passport will be stamped and you will be given the cash.
Recently, some airlines flying to and fro Nigeria were reported to request dollars as a form of payment for the ticket. This is due to the huge amount of money held up in the confines of Nigeria, preventing repatriation that fuels the international airline's operation.
According to IATA, the "amount of airline money blocked from repatriation by the Nigerian government grew to $464 million in July ". With $85 million trapped in Nigeria, the UAE-headquartered international carrier—Emirates—is pulling out of Nigeria from September 1, 2022.
This situation presents a conundrum. The FGN and CBN want citizens to present a ticket before getting allocated their travel allowances. But how will they be able to afford a ticket, if the ticketers (airlines) would now require payment in dollars?