Emiefele, Dollar Card Apps, and the Nigerian Economy

Godwin Emefiele, Dollar and Naira

Nigeria’s financial markets recently experienced a significant turnaround as investors and dealers displayed resilience amidst the suspension and subsequent arrest of the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele. This unexpected development had previously led to the adoption of virtual dollar card apps by Nigerians due to the temporary restriction on Naira cards for international transactions

As you may already know, Nigeria’s financial markets roused to a new start yesterday as investors and dealers shrugged off the weekend’s suspension and arrest of the former Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele. In the first trading session after the announcement of the suspension and arrest, the markets traded positively across all segments.

This is good news for the economy and for the people of Nigeria, especially those who have been struggling with the restrictions imposed by the CBN on Naira cards for international transactions. You see, Mr. Godwin Emefiele had stopped Naira cards from working for international transactions since 2022, citing foreign exchange scarcity and volatility.

This meant that Nigerians who wanted to pay for things like Netflix, Spotify, Facebook ads, Amazon products, Aliexpress items, etc. had to find alternative ways to do so. One of these ways was to use virtual dollar cards.

Virtual dollar cards are dollar-denominated non-physical cards that allow you to make payments online where Naira cards are restricted. They are prepaid cards that can be used on websites and apps that accept Master card or Visa dollar cards. Some of the fintech that offer virtual dollar cards in Nigeria are ALAT, Eyowo, Flip by FluidCoins, Kuda bank, Wallet.Africa, Eversend, Grey Finance and Chippercash.

These virtual dollar cards are funded in USD and you can fund them by simply sending naira into your virtual card account. Some of them also allow you to fund your virtual card with cryptocurrencies like Bitcoin or Ethereum. They charge different fees for issuing and maintaining virtual cards, so you have to compare them and choose the one that suits your needs best.

The Naira Dollar Problem in Nigeria

One of the biggest challenges for companies in Nigeria is accessing dollars. If you are an international investor doing business in Nigeria, you need to go through the Central Bank of Nigeria (CBN) to bring dollars into the country. You can then convert these dollars to naira at the CBN rate. This process can be time-consuming and there is a limited supply of dollars available through the CBN. This is one of the reasons why Nigeria owes Emirates $800 million. Emirates has money in naira, but they cannot convert it to dollars.

With the floating of the naira, anyone can now source for dollars.

This is where market economics comes in. If one person sells dollars for 900 naira, another person sells them for 800 naira, and another person sells them for 850 naira, people will buy from the person selling them for 800 naira. If the person selling for 900 naira is not getting any business, they may lower their price to 850 naira. This process will continue until the price of dollars reaches a point where supply and demand are equal.

The CBN is also a seller of dollars, but they are not the only one. This means that the CBN can set their price for dollars at a competitive level. For example, the CBN could set their price for dollars at 755 naira. If there are other sellers of dollars who are willing to sell for less than 755 naira, people will buy from them instead. This will force the CBN to lower their price until they are competitive.

This process is similar to what happens with gasoline. When gasoline prices were first deregulated, the price of gasoline was very high. However, as more companies entered the market and started selling gasoline, the price of gasoline started to go down. This is because companies were competing with each other to sell gasoline at the lowest price.

If all of the filling stations in Nigeria were allowed to import their own gasoline, the price of gasoline would likely go down even further. This is because companies outside of Nigeria could import gasoline at a lower cost than companies inside of Nigeria. This would force companies inside of Nigeria to lower their prices in order to compete.

Floating the naira and allowing for more competition in the market for dollars will help to lower the price of dollars in Nigeria. This will make it easier for businesses to operate in Nigeria and it will make it cheaper for Nigerians to buy imported goods.

Dollar Card Apps: Effective or Not?

I have personally used some of these virtual dollar cards and I can say that they are very convenient and easy to use. They have saved me a lot of stress and hassle when I want to make online payments. They also have some other benefits such as:

  • They are safer than physical cards because they can be easily blocked or deleted if they are compromised or stolen.
  • They are more flexible than physical cards because they can be customized with different names, addresses, and limits according to your preferences.
  • They are more accessible than physical cards because they can be obtained instantly without going to a bank or filling out any forms.

However, there is also some good news for those who prefer to use their Naira cards for international transactions. According to some reports, the Naira is now valued at N750/$ in the international market, which is a significant improvement from the previous rate of N1000/$. This means that very soon, Nigerians will be able to pay with their Naira cards without any restrictions or limitations.

This is a great development for the economy and for the people of Nigeria. It shows that the suspension and arrest of Mr. Godwin Emefiele was a positive step towards restoring confidence and stability in the financial system. It also shows that Nigeria is moving forward and becoming more integrated with the global community.

I hope you enjoyed reading this blog post and learned something new. Please feel free to leave your comments and questions below. I would love to hear your thoughts and opinions on this topic. Thank you for reading and stay tuned for more updates!

Conclusion: Naira Shall Rise Again

As Nigeria’s financial markets rally back from the suspension and arrest of Mr. Godwin Emefiele, the Governor of the Central Bank of Nigeria, the imminent return of Naira cards for international transactions brings renewed hope and excitement for the country’s economy. The advent of virtual dollar cards provided a temporary solution, but the reintroduction of Naira cards signifies a crucial turning point.

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Managing Director, APT Securities and Funds Limited, Mallam Garba Kurfi, noted that the international response to the decision to suspend the apex bank’s chief could have an impact on the domestic market.

He said the direction of the market reflects its response, adding that the action of the acting CBN Governor would also influence the markets going forward.

Afrinvest Securities said there was a “positive market reaction to CBN shake-up,” citing the general mood of the market.

With the Naira’s value at N750/$ in the international market, Nigerians can soon embrace the convenience and efficiency of using their Naira cards for global transactions. This positive development will stimulate economic growth, enhance ease of doing business, reduce foreign exchange dependency, and strengthen confidence in the financial system. Nigeria stands poised to embark on a new era of financial empowerment, opening doors to greater prosperity for its citizens and businesses alike

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