Naira card limits, FX restriction hinder E-commerce

The decision to limit/restrict access to foreign exchange and the use of Naira cards for foreign transactions both online and abroad by the Central Bank of Nigeria’s (CBN) is hindering the ability of several ecommerce firms to conduct their businesses especially those who wish to make payments for goods and services abroad.

While some e- commerce agencies are of the view that this policy has stifled personal and business transactions online and also hinder the growth of e-commerce in the country, some analysts continue to stress that the measure is beneficial as it is aimed at strengthening the naira.

After just a few years of CBN’s implementation of the cashless policy, many Nigerians reverted to transacting with cash rather than with their bank cards because of the foreign daily limit restrictions earlier directed by CBN and are now complaining of being stuck with the full restriction on access to foreign exchange.

Industry analysts believe that with these restrictions, e-commerce companies and online business entrepreneurs are disadvantaged, hence hindering economic development in the country.

Olufunmbi Falaye, Center Manager (Lagos) of Information Technology Developers Entrepreneurship Accelerator (Idea) hub told BusinessDay in a telephone interview that these restrictions are making these tech start ups lose foreign investors who are weary about not being able to reap dividends due to forex restrictions.

“We are supporting a new generation of Nigerian digital entrepreneurs to develop successful businesses in the areas of mobile apps, enterprise software, linguistic software, custom programming and the likes. To do this effectively, we need both local and foreign investors. However, these foreign exchange restrictions by the CBN is scaring away foreign investors who are worried about not being able to reap the dividends of their investments on Nigerian tech start ups, as government is making it almost impossible to take money out of the country,” he said.

In the same vein, Femi Longe of Co- Creation Hub said that these restrictions do not only affect foreign investors but is biting into the development of technology and e-commerce in Nigeria.

“Most of the businesses we do here in the tech centre of Nigeria have been negatively affected by this recent development. It has become very difficult to pay for hosting of websites, paying for domain names which have to be paid in foreign exchange because hosting a web page is done mostly outside Nigeria. It is almost impossible to host from Nigeria because of the unreliable power supply and other factors.”

“First, the CBN limited the spending limit to $300 and even when you make the payment, the banks do not convert at bank rate. I was charged N269 to a dollar by my bank and hosting a web page now costs close to $200. It used to be far less than this.

“All these factors affect our foreign clients. We used to transfer payments directly to the bureau de change to convert for us but with all these restrictions, we can hardly access foreign exchange and when we do, converting to Naira is stressful,” he concluded.

JUMOKE AKIYODE