CBN Moves to Boost Naira Recovery, Approves 14 New International Money Transfer Operators
- The Central Bank of Nigeria (CBN) has approved in principle to new companies to operate as international money transfer operators (IMTO)
- The CBN said the move is to double foreign exchange remittance, spur growth and creativity, and lower costs
- Previous reports show that Nigeria experienced a decline in diaspora remittances in the first quarter of 2024
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
The Central Bank of Nigeria (CBN) has approved in principle 14 additional new international money transfer operators (IMTOs)
IMTOs carry out cross-border fund transfer services for individuals and entities residing abroad to beneficiaries in Nigeria.
Source: Facebook
CBN moves to double diaspora remittances
Approval in principle is a conditional acceptance of a proposal subject to meeting other requirements for final authorisation.
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CBN gave the approval following plans to boost foreign currency remittance flows via formal channels.
Reports say, CBN’s acting director of corporate communications, Hakama Sidi Ali, disclosed this in Abuja on Wednesday, May 15, 2024.
She stated that the approval will increase the sustained foreign exchange supply in the official market by promoting greater competition and creativity among the operators to lower the cost of remittance transactions and boost financial inclusion.
She said:
“This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira.”
The aim to improve dollar liquidity
She stated that the move by the financial institutions regulator is a means to reduce the historical volatility in Nigeria’s exchange rate caused by external factors including fluctuations in foreign investment and oil export proceeds.
The CBN governor, Olayemi Cardoso said that apex bank partnered with IMTOs to collectively commit to doubling remittance flows through the formal channels into Nigeria.
Cardoso said the bank also set up a task force to address the challenges hindering flows via formal channels.
Legit.ng reported that Nigeria recorded $282.61 million as direct forex remittances in the first quarter of 2024.
The information was obtained from the Central Bank of Nigeria’s (CBN) website on Monday, May 13, 2024.
Diaspora remittances decline in 2024
Forex remittance is the money transferred from Nigerians abroad to family or other individuals in the country.
The amount represents a decline of $18.96 million or a 6.28% drop compared to the $301.57 million recorded in the same period in 2023.
According to reports, during the first quarter of this year, remittances stood at $138.56 million in January, dropping later to $39.14 million in February, before recording an uptick of $104.90 million in March.
The remittances into Nigeria are done via various avenues, including international money transfer operators (IMTOs) and banks.
CBN gives marching orders to IMTOs
On April 20, 2024, the apex bank partnered with IMTOs to commit to doubling remittance flows via formal channels into the country.
On February 13, 2024, the bank announced that dollar transactions via the operators will now be paid to customers in naira.
CBN mandated the IMTOs to quote exchange rates for naira payout to recipients based on the prevailing official FX rates.
The bank also suspended IMTOs from facilitating money transfers from Nigeria to other countries.
CBN fixes new capital requirements for IMTOs
Legit.ng previously reported that the Central Bank of Nigeria (CBN) has fixed $1 million as the minimum share capital requirement for International Money Transfer Operators (IMTOs) in Nigeria.
The bank disclosed this in its revised guidelines for the operation of IMTOs, officially released on its website and signed by the director of the Trade & Exchange Department, Hassan Mahmud.
The new directive followed a series of policy reforms to strengthen the foreign exchange market in Nigeria and encourage remittance via legal and authorized channels.
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Source: Legit.ng
