Recipients to receive N5/$1
The Central Bank of Nigeria (CBN) new policy to reward recipients of diaspora remittances with N5 for every USD1 received as remittance inflow will take effect today.
According to the CBN in a circular signed by CBN’s Director, Trade and Exchange Department, Saleh Jibrin released at the weekend “all recipients of diaspora remittances through CBN licensed IMTOs shall henceforth be paid N5 for every USD1 received as remittance inflow.
“In light of this, the CBN shall, through commercial banks, pay to remittance recipients the incentive of N5 for every USD1 remitted by the sender and collected by the designated beneficiary. This incentive is to be paid to recipients whether they choose to collect USD as cash across the counter in a bank or transfer the same into their domiciliary account. In effect, a typical recipient of diaspora remittances will at the point of collection receive not only the USD sent from abroad but also the additional N5 per USD received.”
While delivering the keynote address at the Fidelity Bank’s inaugural Diaspora Webinar on the implications and impact of the new FX policy on Diaspora investments, CBN, Governor, Godwin Emefiele explained that the move was to increase the transparency of remittance inflows and reducing rent-seeking activities.
He expressed optimism that the new policy measure will encourage banks and financial institutions to develop products and investment vehicles, geared towards attracting investments from Nigerians in the diaspora.
Reiterating the provision of a new circular on remittances, Emefiele said the bank introduced the rebate of N5 for every $1 of fund remitted to Nigeria, through International Money Transfer Operators (IMTOs) licensed by the Central Bank in order to incentivize the process of remittance.
Emefiele emphasized that the new measure would help to make the process of sending remittances through formal bank channels cheaper and more convenient for Nigerians in the diaspora.
Citing cases in other climes, he said the use of reimbursements of remittance fees had been critical in supporting improved inflow of remittances to countries in South Asia and in improving their balance of payments position following the COVID-19 pandemic.
While noting that the average cost of sending $200 worth remittances to Nigeria from the United States was about 4.7 percent, he said studies had shown that even a one percent decrease in the cost of sending remittances could result in a significant boost in inflows.
“Countries in South Asia such as Pakistan and Bangladesh are aware of this impact and they introduced reimbursement schemes to support inflows. In Pakistan, the scheme which is known as free send has enabled a record amount of inflows of over $2 billion a month even during the COVID pandemic.
Commenting on the issue of round-tripping, the bank’s spokesman and Acting Director, Corporate Communications Department, Osita Nwanisobi explained that there was a maximum amount that could be remitted through an IMTO, adding that no customer could send $100,000 through an IMTO.
Though he admitted that the CBN action does not go far enough in offering total reimbursements, Nwanisobi said it was a step in the right direction in reducing the cost burden for Nigerians remitting funds to Nigeria.
While also noting the existence of initial challenges of network integration, Nwanisobi reiterated Emefiele’s assurance that the CBN would continue to work assiduously to resolve the few challenges that were remaining.