Nigeria's Central Bank (CBN) has made a significant decision regarding diaspora remittance. In a circular dated July 10, 2023, the CBN approved the payment of the Naira to beneficiaries of diaspora remittance, ending a ban that had been in place since December 2020.
The CBN banned banks and International Money Transfer Operators (IMTOs) from paying recipients in Naira in December 2020. This meant that only banks could transfer funds onward to recipients, eliminating the business model of many digital remittance companies.
To encourage remittances through formal channels, the CBN introduced the Naira for Dollar Scheme in March 2021. However, the popularity of digital remittance apps allowing customers to receive money in Naira made it doubtful if these policies succeeded.
Now, with the recent circular, the CBN has reversed its policy and allowed banks and IMTOs to pay recipients in Naira. This gives customers the choice to receive funds in foreign currency, eNaira, or Naira. The funds paid in Naira will be based on the Investors & Exporters Window rate on the transaction day.
The circular also expanded the list of registered IMTOs in Nigeria from 47 to 62 companies. Newly approved IMTOs include Comet Trading, CSL Pay Limited, Direkt Wire UK Limited, Fiem Group LLC DBA Ping Express, Lycamoney financial services limited, and SimbaPay Limited.
This decision by the CBN is a significant step towards loosening the strict control over foreign exchange rates and promoting financial inclusion. It provides recipients with more options and flexibility for receiving remittance funds.
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