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The Central Bank of Nigeria, CBN says the country would realise $24bn annually from diaspora remittances following its new policy initiatives.
The CBN Governor, Godwin Emefiele made this known while speaking with newsmen in Abuja on Thursday.
He said, “Over the past few days, the Central Bank of Nigeria (CBN) has announced new policy measures in the country’s remittance programme, which are designed to boost and facilitate an efficient flow of remittances sent home by Nigerians in the Diaspora.
These changes are as a result of our internal review of the operations of International Money Transfer Operators (IMTO) in the country and the potential impact improved flows could have on our economy.
“At this point, I believe it is important to provide a brief review of the history of IMTOs inthe country along with the policy actions that have been taken in the past by the CentralBank of Nigeria.
“In 1996, following the promulgation of a new law which exempted remittances from taxes, the first remittance programme by an IMTO was launched in Nigeria. This private arrangement, with limited involvement by the Central Bank of Nigeria, was between an IMTO, Western Union and First Bank of Nigeria, which was then the only Western Union agent.
“Indeed, I am aware that at that initial stage, Western Union dealt with only First Bank directly, while First Bank of Nigeria, in turn, had other banks as sub-agents. This programme enabled recipients of remittances to receive such funds over the counter in foreign currency, amongst other options.
The apex bank said that following the successful launchof this programme, other money transfer organizations launched similar initiatives toprovide services to the growing number of Nigerians in the Diaspora who were keen onremitting funds back to Nigeria.
“However, due to issues around dollar cash availability, some of the remittance operatorsworking with the commercial banks decided to remit funds to recipients in our local currency, at an agreed exchange rate between the banks and the IMTOs.
“In 2016, the CBN, in an effort to increase remittance inflows and improve the number offormal channels under which Nigerians in the Diaspora could remit funds, launched alicensing regime to guide the conduct and operations of IMTOs.
“As a result of this newpolicy measure, 65 International Money Transfer Operators were licensed by the CBN forinbound remittances.Given the estimated annual remittance inflow of close to $24bn, which could help inimproving our balance of payment position, reduce our dependence on external borrowingand mitigate the impact of COVID-19 on foreign exchange inflows into the country, theCBN sought to find ways to support improved remittance inflows into the country throughofficial channels.
Based on this premise, we analyzed data on IMTO inflows into the country over the pastyear, 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 thecountry.
It also encouraged the use of unsafe unofficial channels, which also supporteddiversion of remittance flows meant for Nigeria, thereby undermining our ForeignExchange management framework.
As a result, in an effort to boost remittance inflows and foster an environment that wouldenable faster, cheaper, and more convenient flow of remittances back to Nigeria, theCentral Bank of Nigeria, on November 30, 2020, announced a new policy initiative, whichwould help to support these objectives. Please permit me to apprise you with the contentof the new policy measures.
On Amendment to Procedures for Receipt of Diaspora Remittances, the CBN Governor said; in an effort to liberalize, simplify and improve the receipt and administration of Diaspora remittances into Nigeria, the Central Bank of Nigeria (CBN) wishes to announce as follows: Beneficiaries of Diaspora Remittances through International Money Transfer Operators (IMTOs) 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.
“These changes are necessary to deepen the foreign exchange market, provide moreliquidity, and create more transparency in the administration of Diaspora Remittances intoNigeria. In addition, these changes would help finance a future stream of investment opportunities for Nigerians in the Diaspora, while also guaranteeing that recipients ofremittances would receive a market-reflective exchange rate for their inflows.
“The CBN boss added that all Authorized Dealers and the general public should note that beneficiaries shall haveunfettered access and utilization to such foreign currency proceeds, either in FX cash and/or in their Domiciliary Accounts, in line with our circularTED/FEM/FPC/GEN/01/010.
“Ladies and Gentlemen, In the course of following up on the implementation of theaforementioned new policies, the CBN observed some pushback by some of the IMTOswho were bent on undermining the new policies. This was the reason the CBN had to insist on Wednesday, December 2, 2020, that all DMBs MUST close all Naira General Ledgers through which the Naira remittances were hitherto being carried out.
“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 andthe IMTOs to ensure that recipients of remittance inflows are able to receive their fundsin the designated foreign currency of their choice.
“As a result of these engagements whichtook place with major IMTOs and the DMBs, today, Thursday, December 3, 2020, thestakeholders have committed that they would deploy all the necessary tools to ensurethat these measures become effective from Friday, December 4, 2020.
“I therefore seizethis opportunity to announce to Nigerians both at home and in the Diaspora, that the policyof recipients receiving their monies from abroad kicks off on December 4, 2020.
“All the IT systems of these IMTOs (Western Union, Money gram and Ria services) and the DMBs have been properly configured to begin remittance tomorrow, Friday, December 4, 2020.
“In closing, we believe that these new policy measures would help in providing a more convenient channel for Nigerians in the Diaspora to remit funds back to Nigeria, as well as ensure that these funds can contribute to the overall development of our economy.”