The central bank of Nigeria (CBN) recently released new guidelines for international transactions in the country. With the recent Covid-19 pandemic and the EndSARS protest now well behind us, and its devastating effect on the Nigerian economy, the apex bank is looking for ways to infuse more liquidity in the economy. To make matters worse, Nigeria just entered another recession – the second in five years.
That is why, in response to these, the apex bank has rolled out more foreign exchange guidelines to put some “fire” in a dying economy. The central bank governor Godwin Emefiele, has directed that from December 4th, 2020, Nigerians can now receive money from their overseas counterparts, families, and friends in dollar or any currency of their choice.
It might interest you to know that the estimated annual inflow of remittances from the diaspora is close to $24bn which is a very big boost for an economy like Nigeria.
See excerpts:
To improve the receipt and administration of Diaspora remittances into Nigeria, the Central Bank of Nigeria (CBN) wishes to announce as follows:
1. 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.
2. Such recipients of remittances may have the option of receiving these funds in foreign currency cash (US Dollars) or into their ordinary domiciliary account.
Why is CBN taking this route?
In the circular by the Central bank, it believes that based on the earlier arrangement, International Money Transfer Operators (IMTOs), hoard foreign remittances which often leads to arbitrage resulting in a significant drop of inflow into the country.
Before now, foreign remittances were only paid in naira while the local agents would usually proceed to hoard the dollar to sell at black market prices when the naira depreciates.
However, more supply of the dollar in circulation will lead to the stability of the Nigerian economy and reduce our reliance on foreign loans and credits.
Now that the CBN has directed all foreign remittances to be paid to the beneficiary in foreign currency through any bank of their choice or in cash, it will create more supply of the already scarce dollar in the Nigerian economy.
So what does it mean for you?
If you engage in international transactions, then this new foreign policy guideline has everything to do with you. Instead of getting paid in the naira equivalent of any foreign remittance you receive from the diaspora, you can now receive your money in dollars or any currency of your choice.
This new policy puts the power back in your hands. You don’t have to be at the mercy of local money agents who buy your dollars cheaply while they proceed to the black market to make huge gains.
However, the Central bank believes the issuance of foreign remittance in naira is still ongoing. That is why it has banned payment service providers like Interswitch, POS machine operators, and Flutterwave from receiving international remittances.
With this new policy, CBN brings to a close the era of receiving diaspora remittances in an online wallet. You either receive your money in cash or a transfer to a domiciliary account and any currency of your choice.
What do you think about this new policy? Leave your comment below!