In this article by MARK ITSIBOR, experts and industry operators say the return of international spending on naira cards signals more than banking convenience.
For years, the inability of Nigerians to use naira debit cards for international transactions became one of the most visible symbols of the country’s foreign exchange crisis.
Travelers, students, online shoppers and businesses were forced to seek alternatives as banks suspended international transactions on naira cards amid persistent dollar shortages. The restrictions reflected deeper structural problems within the foreign exchange market, where demand consistently outpaced supply and multiple exchange rates created opportunities for arbitrage and speculation.
The gradual return of international spending on naira cards is being viewed by many analysts as a sign that conditions in Nigeria’s foreign exchange market may be changing.
In recent months, several commercial banks have resumed or expanded international transaction limits on naira-denominated cards. Guaranty Trust Bank increased its quarterly international spending limit to $20,000. United Bank for Africa, FirstBank and Wema Bank have also reactivated international transactions on selected naira cards, allowing customers to make payments on global platforms and conduct overseas transactions with greater ease.
While the development directly benefits consumers, economists argue that its significance extends beyond retail banking convenience. They see it as a reflection of improving liquidity in the official foreign exchange market and growing confidence among financial institutions that dollar supplies can be sustained.
The restrictions imposed by banks between 2021 and 2023 were not policy decisions made in isolation. They were largely responses to severe pressure on foreign exchange reserves and uncertainty surrounding access to dollars.
At the time, many businesses struggled to obtain foreign currency through official channels. Importers faced delays. Manufacturers complained about shortages. Individuals seeking foreign exchange often turned to the parallel market, where rates diverged significantly from official prices.
The result was a fragmented market that discouraged investment and complicated economic planning.
When the current monetary authorities assumed office in late 2023, they inherited an economy grappling with exchange-rate distortions, a sizeable backlog of unmet foreign exchange obligations and declining investor confidence.
The response involved a series of reforms aimed at restoring transparency and improving market confidence. These included exchange-rate liberalisation, efforts to clear outstanding foreign exchange obligations and tighter coordination between fiscal and monetary authorities.
The reforms were not without pain.
Exchange-rate adjustments contributed to inflationary pressures, while businesses and households faced higher costs. Critics questioned whether the short-term sacrifices would ultimately deliver the promised benefits.
Nearly three years later, however, some indicators suggest that foreign investors are beginning to reassess Nigeria’s prospects. A review of official data shows that foreign exchange inflows have strengthened considerably, supported by portfolio investments, remittances, export proceeds and renewed interest from international investors. The country’s external reserves have also risen above the $50 billion mark, providing an additional buffer against external shocks.
For many analysts, the significance of stronger reserves lies not simply in the headline figure but in what it signals about market confidence.
Head of Financial Institutions Ratings at Agusto & Co., Ayokunle Olubunmi believes improved liquidity has played a crucial role in banks’ decisions to restore international card transactions.
According to him, the narrowing gap between official and parallel market rates has reduced arbitrage opportunities and eased pressure on foreign exchange demand. In such an environment, banks are more comfortable providing customers with access to international payment services.
His observation highlights a broader issue that often receives less attention.
Financial institutions generally respond to market realities rather than political narratives. When banks increase foreign spending limits, they do so because they believe underlying liquidity conditions can support such decisions.
That reality may explain why the return of international card transactions is attracting attention among investors and economic observers.
