Nigeria has ordered International Money Transfer Operators (IMTOs) offering remittance services to the country to pay recipients of money sent to the country from abroad in the foreign currency used by the senders it they so desire.
This means, if you send 500 euros from Germany to your sister in Nigeria, she must be paid 500 euros or the equivalent in US dollars over the counter in Nigeria and no longer in naira, if she chooses to receive the money in euros.
The new policy, announced by the Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, on Thursday in Abuja entered into effect on Friday, 4 December 2020.
The CBN adopted the new policy after discovering that Nigeria was being short-changed by the international money transfer companies acting in collusion with their partners in Nigeria as the volume of money sent to Nigeria is not reflected in the amount received by Nigeria.
There have been rumours for several years that the banks and the IMTOs collude to keep money sent to Nigeria from reaching Nigeria through a dubious exchange scheme.
“We analysed data on IMTO inflows into the country over the past year, and through our investigations discovered that some IMTOs rather than compete on improving transaction volumes and create more efficient ways for Nigerians in the Diaspora to remit funds, resorted to engaging in arbitrage arrangements on the naira dollar exchange rate, which to a large extent resulted in a significant drop in flows into the country,” Emefiele said.
It is therefore “in an effort to boost remittance inflows and foster an environment that would enable faster, cheaper, and more convenient flow of remittances back to Nigeria,” that the CBN announced the new policy initiative, the CBN chief said.
Here is the new policy directive contained in the document, titled “Amendment to Procedures for Receipt of Diaspora Remittances”, issued by the CBN:
“In an effort to liberalize, simplify and improve the receipt and administration of Diaspora remittances into Nigeria, the Central Bank of Nigeria wishes to announce as follows:
- Beneficiaries of Diaspora Remittances through International Money Transfer Operators shall henceforth receive such inflows in foreign currency (US Dollars) through the designated bank of their choice.
- Such recipients of remittances may have the option of receiving these funds in foreign currency cash (US Dollars) or into their ordinary domiciliary account.
“All Authorized Dealers and the general public should note that beneficiaries shall have unfettered access and utilization to such foreign currency proceeds, either in FX [foreign exchange] cash and/or in their Domiciliary Accounts, in line with our circular TED/FEM/FPC/GEN/01/010.”
In closing the press briefing, the CBN Governor said:
“Following the announcement of these new policy measures, the Central Bank of Nigeria in an effort to enable smooth implementation, engaged with the commercial banks and the IMTOs to ensure that recipients of remittance inflows are able to receive their funds in the designated foreign currency of their choice.
“As a result of these engagements which took place with major IMTOs and the DMBs, today, Thursday, December 3, 2020, the stakeholders have committed that they would deploy all the necessary tools to ensure that these measures become effective from Friday, December 4, 2020.
“I therefore seize this opportunity to announce to Nigerians both at home and in the Diaspora, that the policy of recipients receiving their monies [in foreign currencies] from abroad kicks off on December 4, 2020.”