According to the CBN, expatriates send money to Nigeria in 2021 is going to increase. The Central Bank of Nigeria has issued some circulars that were an effort to simplify, liberalize and improve the receipt and administration of diaspora remittances in Nigeria. It was also said that the clarifications and amendments are now aimed at stabilizing and deepening the foreign exchange market, giving a lot more liquidity and also creating transparency.
Statements Of Initial Circular
It is so mainly in the administration of diaspora remittance in Nigeria. If someone sends money to Nigeria online or offline, the rule will apply to all transactions. The initial Circular issued dated 30 November 2020 to all of the authorized dealers and also the public states that:
- Beneficiaries of the diaspora remittance through International Money Transfer Operators should receive the inflows in a foreign currency through designated banks of their own choice.
- The beneficiaries will then have the option of getting the funds in the foreign currency cash or using the direct transfer or credit in their ordinary domiciliary accounts.
- The beneficiaries will also have unfettered access, and the use of such foreign currency moves ahead, either in cash or in the domiciliary account.
This point was then clarified by ED/FEM/FPC/GEN/01/010 circular issued by the CBN on the same day (the 2nd Circular).
Statements of ED/FEM/FPC/GEN/0/012
The first Circular was received by getting mixed reactions from the public and the stakeholders. As a result, the CBN, attempting to clarify its position, issued a circular ED/FEM/FPC/GEN/0/012 on 02 December 2020 stating that:
- IMTOs should ensure that all money transfers to Nigeria that are in favor of the beneficiaries are deposited into the agent banks correspondent account
- The DMBs in Nigeria will also be responsible for the final payment
- The beneficiaries have the sole discretion of choosing the mode of payment that will be adopted.
In a clarification in the new CBN, the CBN Governor press conference in Abuja said: CBN had engaged with IMTOs and DMBs.
To ensure that the recipients of remittance inflows can get their funds in the designated foreign currency of choice, they have to implement this new policy.
He Also Highlighted A Few Reasons For The Adoption Of A New Policy, Which Is As Follows:
- The significant drop in inflows of the country was caused by one of the factors that contributed to the fact that IMTOs have, over this time, restored to engaging in the arbitrage arrangements on the Naira Dollar exchange rate.
- Other than competing on improving the transaction columns and also creating a lot more efficient ways for the Nigerians in the diaspora to remit out the funds.
- Naira’s closure was essential as it had encouraged unsafe and unofficial channels that also supported the diversion of remittance flows meant for Nigeria.
Hence it undermined the foreign exchange management framework.
Based on the data culled by CBN, the size of remittance computed by the International Monetary Fund shows that the IMF also considers the indirect money flow. And earnings for Nigerian Diaspora in many parts of the world in calculating remittances. Hence the new policy will now allow for proper accounting of a foreign exchange inflow in Nigeria.
The impact of the new policy, above all, is that it is aimed at increasing online money transfer to Nigeria in the form of foreign currency. This policy is now in effect and stabilizing the dollar’s exchange rate to Naira as there will be an increase in the supply of dollars in Nigeria.