CBN Directs IMTOs to Pay Diaspora Remittances in Naira
The Central Bank of Nigeria (CBN) has issued new measures it is currently putting in place, to boost naira liquidity and raise diaspora remittances.
The apex bank directed Deposit Money Banks (DMBs) and International Money Transfer Operators (IMTOS) to pay all diaspora remittances in Naira and match with the corresponding foreign currency inflows going forward.
This was as the CBN Governor, Mr. Olayemi Cardoso, on Tuesday reaffirmed the determination of the Monetary Policy Committee (MPC) to subdue inflationary concerns through conventional methods.
The central bank disclosed its directive to all DMBs and IMTOS to pay all diaspora remittances in Naira in a circular dated June 24, 2024, that was signed by the CBN acting Director, Trade & Exchange Department, Dr. W. J. Him, which was addressed to all DMBs and IMTOS.
The apex bank noted that the move was part of CBN’s commitment to the smooth functioning of the foreign exchange markets and enabling greater remittance flows through formal channels.
Specifically, the central bank pointed out that it has implemented measures that would enable eligible IMTOs to access Naira liquidity through the apex bank.
Consequently, the CBN said henceforth, eligible IMTO operators would be able to access the CBN window directly or through their Authorised Dealer Banks (ADBs) to execute transactions for the sale of foreign exchange in the markek.
According to its latest circular, the apex bank said eligible International Money Transfer Operators (IMTOs), will now have access to naira liquidity through the bank’s window.
The central bank disclosed its directive to all DMBs and IMTOS to pay all diaspora remittances in Naira in a circular dated June 24, 2024, that was signed by the CBN acting Director, Trade & Exchange Department, Dr. W. J. Him, which was addressed to all DMBs and IMTOS.
The apex bank noted that the move was part of CBN’s commitment to the smooth functioning of the foreign exchange markets and enabling greater remittance flows through formal channels.
This initiative is designed to widen access to local currency liquidity, ensuring smoother and more efficient settlement processes for remittances, the CBN said.
According to the circular, all participants are required to submit daily regulatory returns to the CBN. These returns must include all relevant information on the sources of funds. The key participants in the segment include: IMTOs, authorised dealer banks, and the CBN.
Under the new guidelines, IMTO operators will be able to directly access the CBN window, or do so via their Authorised Dealer Banks (ADBs) to execute foreign exchange transactions in the market. The circular outlines specific compliance measures to ensure the effective operation of the initiative.
It also said pricing on the CBN portal will mirror the NAFEX traded rates, which are based on an acceptable market benchmark.
The operation of the segment will follow the existing arrangements in place for authorised dealers involved with foreign portfolio investment in primary market securities auctions.
The circular emphasised that these measures are effective immediately, highlighting the bank’s commitment to maintaining the smooth functioning of the foreign exchange market and improving formal remittance channels.
The decision is expected to significantly improve the liquidity of local currency for diaspora remittances, thereby enhancing the overall efficiency and reliability of the foreign exchange market in the country.
The CBN has focused on increasing remittances and naira liquidity. This is as in May 2024, the bank granted 14 IMTOs an approval-in-principle (AIP) in an effort to double foreign-currency remittance inflows through formal channels.
“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.
The CBN Governor, Olayemi Cardoso, had recently disclosed the apex bank’s target to double remittance flows into Nigeria within a year, which he firmly believed was possible.
He said, “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.” #CBN Directs IMTOs to Pay Diaspora Remittances in Naira
