The Central Bank of Nigeria in a circular to all Deposit Money Banks and International Money Transfer Operators dated March 5 announced the introduction of what it called the “Naira4Dollar” scheme for Diaspora Remittances, an incentive for senders and recipients of International Money Transfer.
The scheme, the apex bank said is an incentive to attract remittances through official channels. It noted that other countries such as Bangladesh, India and Pakistan all have similar policies in place.
”In an effort to reduce the cost burden of remitting funds to Nigeria by working Nigerians in the Diaspora, the CBN has introduced a rebate of N5 for every $1 of fund remitted to Nigeria, through IMTOs licensed by the CBN. The Scheme will take effect on the 8th of March 2021,” the bank tweeted via its official Twitter handle.
The bank says the new measure will help to make the process of sending remittance through formal bank channels cheaper and more convenient for Nigerians in the diaspora.
Below are 5 other things to note about the policy:
With the scheme, anyone who sends money transfers via official bank channels gets N5 for every $1.
The policy is an aim to encourage money remittance through official channels which will in turn reflect in the nation’s remittance records and shore up the nation’s foreign exchange transaction.
The new FX policy is intended to create an easier, more flexible and transparent system of remittance administration. With this, the bank hopes that it will greatly enhance benefits of diaspora remittances and in turn support investments and growth in the country.
Aside from being just a policy to draw in foreign remittances, the scheme it appears is inspired more from latest data from PwC whose forecast suggest that Nigeria’s remittance flows could reach US$34.89 billion by 2023. But this is hinged on the condition that remittance infrastructure improves and the right policies put in place.
Another reason for this scheme is the fact that records show that in 2019, Nigerians abroad remitted a record $3.3 billion via official channels, the highest in the last 5 years. This however dropped in 2020 when the exchange rate was devalued and the disparity with the black market rates widened remittances plummeted by as much of 61% from $2.8 billion Q3 YTD in 2019 to $1.09 billion same period in 2020.
This huge drop to a large extent was influenced by the impact of Covid-19 across the world.
