Friday, December
04, 2020 / 12:05 PM / by CBN / Header Image Credit: Nikkei Asian Review
Being Remarks by the
Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, CON on Improving
Remittance Inflows into Nigeria held Thursday, December 3, 2020
(Protocols)
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 in the country along with the policy
actions that have been taken in the past by the Central Bank 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. Following the successful launch of this programme, other money
transfer organizations launched similar initiatives to provide services to the
growing number of Nigerians in the Diaspora who were keen on remitting funds
back to Nigeria.
However, due to issues around dollar cash
availability, some of the remittance operators working 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 of formal channels under which Nigerians in the
Diaspora could remit funds, launched a licensing regime to guide the conduct
and operations of IMTOs. As a result of this new policy measure, 65
International Money Transfer Operators were licensed by the CBN for inbound
remittances.
Given the estimated annual remittance inflow of close
to $24bn, which could help in improving our balance of payment position, reduce
our dependence on external borrowing and mitigate the impact of COVID-19 on
foreign exchange inflows into the country, the CBN sought to find ways to
support improved remittance inflows into the country through official channels.
Based on this premise, we analyzed 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 nairadollar
exchange rate, which to a large extent resulted in a significant drop in flows
into the country. It also encouraged the use of unsafe unofficial channels,
which also supported diversion of remittance flows meant for Nigeria, thereby
undermining our Foreign Exchange management framework.
As a result, 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, the Central Bank of Nigeria, on
November 30, 2020, announced a new policy initiative, which would help to
support these objectives. Please permit me to apprise you with the content of
the new policy measures.
Amendment to Procedures
for Receipt of Diaspora Remittances
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 more liquidity, and create more transparency in the
administration of Diaspora Remittances into Nigeria. In addition, these changes
would help finance a future stream of investment opportunities for Nigerians in
the Diaspora, while also guaranteeing that recipients of remittances would
receive a market-reflective exchange rate for their inflows.
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 cash and/or in their Domiciliary
Accounts, in line with our circular
TED/FEM/FPC/GEN/01/010.
Ladies and Gentlemen, In the course of following up on
the implementation of the aforementioned new policies, the CBN observed some
pushback by some of the IMTOs who 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 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 from
abroad kicks off on December 4, 2020. All the IT systems of these IMTOs
(Western Union, Moneygram 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.
Thank you for your attention!
Related Links
Related News
Signup with Facebook
Signup with Twitter
