CBN Initiates Plan to Boost Remittances
Written by Jerry Alomatu on May 16, 2024
The Central Bank of Nigeria (CBN) has commenced efforts to double foreign currency remittances through formal channels by granting Approval-in-Principle (AIP) to 14 new International Money Transfer Operators (IMTOs).
This was revealed yesterday by Mrs. Hakama Sidi Ali, the Acting Director of Corporate Communications at the Apex Bank. She emphasized that this initiative aims to enhance the continuous flow of foreign exchange in the official market by fostering increased competition and innovation among IMTOs. This, in turn, is expected to reduce the cost of remittance transactions and enhance financial inclusion.
She stated, “This move will bolster liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), facilitating price discovery to establish a market-driven fair value for the naira.”
It’s worth noting that CBN Governor, Mr. Olayemi Cardoso, recently announced, “We have set a target to double remittance flows into Nigeria within a year, a goal that I firmly believe is achievable. We are taking proactive steps to eliminate any barriers hindering flows through formal channels permanently. We have a clear roadmap and a systematic approach to address all challenges ahead, collaborating closely with key stakeholders in the remittance industry.”
Furthermore, Sidi Ali emphasized that the CBN perceives increasing formal remittance flows as a significant source of foreign exchange, contributing over 6% to the GDP. This is seen as a strategy to mitigate the historical volatility in Nigeria’s exchange rate caused by external factors like fluctuations in foreign investment and oil export proceeds.
The expansion of the number of IMTOs is one of the key initiatives undertaken by the CBN’s remittance task force, led by Governor Cardoso. This task force, comprised of specialists, works closely with the private sector and market operators to streamline operations in Nigeria’s remittance ecosystem. It was established following an executive learning session with IMTOs during the World Bank/IMF Spring Meetings held in Washington DC, United States of America, in April 2024. The task force will convene regularly to execute strategies and assess the impact of its interventions on remittance inflows.
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Author: Jerry Alomatu
Astute communicator
