The Foreign currency (FX) regime in Nigeria is a little complex – there are 3 different markets for FX all at different price points with varying means of access and availability. In this environment you need to be clear on how to get FX when you need it and thankfully despite the complexity, there are some legitimate ways to do so.
The CBN provides foreign currency for personal travel aka PTA (Personal travel allowance) and recently introduced an ‘automated’ process’ to apply for it as well as other ‘official’ FX requests. This post gives you an overview of the new regime for accessing PTA and in it I share my experience of the process and some tips that I have to make it smoother for you.
Summary:
Here’s what you need to know if you don’t have time to read this post in full:
Form A
In November 2021, CBN announced the automation of the process for accessing FX for travel – henceforth individuals would be able to apply for foreign exchange online via the automated Form A process. This seemed like good progress and a step forward in terms of innovation but first, what is form A and what does it enable us to do?
Form A, Ok
Form A is used to apply to purchase funds to pay for service transactions – what is known as ‘Invisible trade’. It allows you to purchase funds at the CBN official rate for eligible services only including:
- School fees
- Personal travel allowance (PTA)
- Medical bills
- Training courses
- Mortgage payments
Why the new approach?
The old way involved going to a physical bank branch, completing a paper Form A and submitting documents. You would then have to wait for a period after which you would, or would not, be allocated FX at the CBN official rate.
There were many tales of frustration at the speed and variability of success of the process – frequent levels of rejection – and its fraudulent use – individuals and companies accessing money at the official rate using fake documents allowing them to access the funds without actually taking a trip.
Personal travel allowance
Every Nigerian is entitled to receive $4,000 of PTA on a quarterly basis provided that they travel internationally to a destination that is at least 5 hours flight time away and meet the requirements. Applicants must be at least 18 years old and additionally:
- Hold a valid Nigerian International passport and visa for the country of travel
- Have a return air ticket
- The flight must originate from Nigeria and the journey must be at least 5 hours flight time
- Can only apply a maximum of 14 days before the date of travel.
All of the requirements are monitored by the banks and ultimately CBN and as a deterrent to bad behaviour, banks regularly publish names of those who cheat the system in various ways.
Why bother?
It is essential that you utilise your PTA if you are travelling as, you can save yourself a lot of money compared to the black-market rate and all for a relatively small amount of hassle.
Prior to now I rarely applied for PTA because of the manual nature of the process and the fact that in the recent past the black market and official rate, were pretty well aligned. Fast forward to mid 2021 onwards this is an entirely different matter with the gap between official rate being as wide as ₦200 and above, it really is worth using up your entitlement. On $4,000 you can save ₦664,000 (N664,000 saving based on black market rate of $1: ₦585 and official rate of $1: ₦419 by buying PTA through official routes rather than the black market.
Automation of Form A
The automation of Form A removes the need to go to your bank branch to apply for PTA. Instead, all you have to do, at the application stage, is to the form via a specific link provided by CBN:
Here’s how it works:
Form A process for PTA
First, you need to create an account with your email address and set up a password. When you are ready to apply, log onto the system and create an application
TIP: CBN says that you should apply no longer than 2 weeks before you are due to travel. With the benefit of experience, however, i advise that you apply as soon as possible once you have your ticket.
This is what the home screen looks like:
On this screen your personal details, from your BVN, are displayed. At this stage you don’t have to submit any information, just go to the next screen which is where you select the type of transaction (PTA) and amount being applied for.
Here’s what the top part of that screen looks like:
The fields with the red border are those that need to be completed – required information:
- Beneficiary information: Address, Telephone number, City and State
- Request information: Currency and amount
- Travel information: International passport number, Destination country, Airline, Air ticket number, Travel route
Tip: A number of different currencies are offered, including Pounds sterling, Euro and Yuan / Renminbi. Given that the informal currency of Nigeria is the US Dollar, I suggest you that you select Dollars rather than anything else.
The next page is for you to provide the details of the bank that you want to receive the money from and also the mode of receipt i.e., cash or payment into your domiciliary account. You don’t actually have to apply through your bank – some banks apparently offer a walk-in service, but my guess is that it will be easier with a bank that is familiar with you already. The list of banks that can offer PTA is long and this information will come in handy if there are supply issues with your bank.
The final page before submission is where you attach the documentation.
TIP: As you can see the page just prompts for you to attach a copy of your valid visa and International passport data page. What it doesn’t ask for is a copy of your return ticket – make sure that you select ‘Add attachment’ and provide a copy of your return ticket.
The final page allows you to review your entire application before submission and once you do, the wait then begins.
What next?
Over the next few days, I logged onto the portal (www.tradesystem.gov.ng/login) and checked the status of my application. About a week and a half later I received an email confirming that the application has been approved and that the status on the application had changed from Submitted to ‘ADB_DISBURSEMENT_REVIEWER’.
I called my account officer who advised that this is a positive step and that I should go to the branch to pick up the requested money.
I was in for a shock when I got to the bank as they told me that despite my application ‘approval’ does not mean that you will actually get the funds as there needs to be a matching ‘allocation’ for your request. My bank was extremely apologetic (clearly this happens with them quite a lot) but with a couple of days to go before I travelled, they could not provide me with the PTA allowance that they had approved.
Solution
Thankfully I was able to secure FX at another bank that I have an account with, just before I travelled. They confirmed availability ahead of time and I was lucky to have found the right bank at the right time. Here’s what I learned from this experience along with some advice on how to navigate it:
Form A application advice
- Speak to your Bank first. Although this is an automated system it still fundamentally relies on human beings to make decisions and fill out paperwork for CBN. Check, in advance, if your bank actually has cash to pay you at the time you need it and if not, go to another bank or be ready to open a bank account somewhere else if you need the FX.
- Apply earlier than the two weeks. My Bank advised that I do this for future requests as, despite the CBN guidance, there is a chance that you could miss out if your application is not able to be funded. Banks generally have a list of requests that will vary based on demand and only a finite amount of $ funding that they receive weekly. If you apply but are not matched to available funding you will not get the cash. Applying earlier puts you on the Banks waiting list and if you don’t receive the cash one week, you will be priority for the next.
- The form is the only ‘automated / automatic’ thing about this process! Its not quite as painful as the old way but it is not all smooth sailing. Consider having the PTA paid into your domiciliary account to minimise you having to go into the branch to pick up the cash.
- Check the portal every couple of days to see the progress of your application. Also make sure that your account officer is aware and chasing up
- Consider doing multiple applications. Note that it is illegal to procure more than $4,000 per quarter so if one application fails, make sure that you delete it and only accept funds once per quarter up to the maximum. You don’t want your name to be published in a newspaper and ultimately have to return excess funds collected.
In closing
My experience of the new automated Form A process was mixed but for the most ‘OK’! Given the current FX environment and the potential saving if you are travelling then it only makes sense to make sure that you get your PTA allowance.
Thanks for listening and here’s to your Financial wealth!