Financial experts have expressed their belief that the recent decision by the Central Bank of Nigeria (CBN) to allow naira payment options for diaspora remittances will have a positive impact. The move is expected to boost the inflow of remittances from Nigerians abroad.
In a circular addressed to Deposit Money Banks, International Money Transfer Operators, and the general public, the CBN stated that Nigerians can now receive their diaspora remittances in naira, in addition to the existing options of receiving them in dollars and e-naira.
The circular explained, “All recipients of diaspora remittances through the CBN-approved IMTOs on the attached list shall henceforth have the option of receiving naira payment in addition to USD and e-Naira as payout options.”
As of July 10, the CBN has listed approximately 62 licensed International Money Transfer Operators (IMTOs).
In November 2020, the CBN issued a circular to enhance the receipt and administration of diaspora remittances, allowing beneficiaries to receive their inflows in foreign currency (US dollars) through their chosen banks.
Experts have noted that the previous restriction on naira payment was due to the wide gap between the official and parallel market rates. They believe the new directive will encourage Nigerians in the diaspora to send their remittances through the official banking system.
Johnson Chukwu, the Managing Director of Cowry Asset Management Limited, explained, “Initially, the reason behind disallowing naira payment for dollar remittances was to prevent beneficiaries from being shortchanged. The parallel market rate was significantly higher than the official rate, discouraging people from making remittances through official channels.”
“Now that the exchange rate has been harmonized, we can expect a shift towards using the banking system for remittances, as the previous shortfall in the official window has been addressed,” Chukwu added.