THE Central Bank of Nigeria (CBN) has opened new measures for eligible International Money Transfer Operators (IMTOs) to access naira liquidity to settle diaspora remittances.
This move is expected to increase the dollar supply in Nigeria’s foreign exchange market and solve Nigeria’s currency problems.
The apex bank disclosed this in a circular on Monday, June 24 signed by its Acting Director of Trade and Exchange Department, W.J. Kanya, stating that the measures come immediately.
It said IMTOs would now have direct access to naira liquidity through the CBN’s window via their Authorised Dealer Banks (ADBs) to execute foreign exchange transactions in the market.
The initiative is designed to widen access to local currency liquidity, ensuring smoother and more efficient settlement processes for remittances.
It outlined specific compliance measures to ensure the effective operation of the initiative.
It said transactions executed before noon on a trading date would be settled on the same day and also that pricing on the CBN portal would mirror the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) traded rates, which are based on an acceptable market benchmark.
“The operation of the segment will follow the existing arrangements in place for authorized dealers involved with foreign portfolio investment in primary market securities auctions,” CBN further outlined.
It added that all participants were required to submit daily regulatory returns to the apex bank which must include all relevant information on the sources of funds.
According to the apex bank, the key participants in the segment include the IMTOs, authorized dealer banks, and the CBN.
Earlier in May, the CBN granted 14 new IMTOs approval in principle (AIP) to double foreign currency remittance inflows through formal channels.
The ICIR reports that IMTOs carry out cross-border fund transfer services for individuals and entities residing abroad to recipients in Nigeria while AIP is a conditional acceptance of a proposal subject to meeting other requirements for final approval.
“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,” said Hakama Sidi Ali, CBN’s Acting Director of Corporate Communications, while announcing the new plan in a statement.
In April, the CBN issued specific guidelines on IMTO services, including minimum capital requirements and prompt repatriation of export proceeds, The ICIR reported.
Also, the CBN Governor, Olayemi Cardoso, hinted at the apex bank’s target to double remittance flows into Nigeria within a year.
“We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. We have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry,” he said.
A check on the CBN website shows that Nigeria recorded $282.61 million in direct foreign exchange (FX) remittances in the first quarter (Q1) of this year, compared to the $301.57 million remittances recorded in Q1 2023, representing a decline of $18.96 million or 6.28 percent.
The ICIR reports that Nigeria’s direct foreign exchange remittance refers to money transfers from Nigerians to family members or other individuals in the country.