Diaspora Remittances In Dollars: Giving Beneficiaries Value For Money

0 70

In 2016, the CBN, in an effort to increase remittance inflows and improve the number of formal channels under which Nigerians in the Diaspora could remit funds, launched a licensing regime to guide the conduct and operations of IMTOs. As a result of this new policy measure, 65 IMTOs were licensed by the CBN for inbound remittances.

In an effort to boost remittance inflows and foster an environment that would enable faster, cheaper, and more convenient flow of remittances back to Nigeria, the CBN , recently announced a new policy initiative, which would help to support these objectives.

Understanding the new policy measures

In an effort to liberalise, simplify and improve the receipt and administration of Diaspora remittances into Nigeria, the apex bank directed that beneficiaries of Diaspora Remittances through IMTOs shall henceforth receive such inflows in foreign currency (US Dollars) through the designated bank of their choice.

Such recipients of remittances may have the option of receiving these funds in foreign currency cash (US Dollars) or into their ordinary domiciliary account.

Emefiele explained that these changes are necessary to deepen the foreign exchange market, provide more liquidity, and create more transparency in the administration of Diaspora Remittances into Nigeria. In addition, these changes would help finance a future stream of investment opportunities for Nigerians in the Diaspora, while also guaranteeing that recipients of remittances would receive a market-reflective exchange rate for their inflows.

“All Authorised Dealers and the general public should note that beneficiaries shall have unfettered access and utilisation to such foreign currency proceeds, either in forex cash and/or in their domiciliary accounts, in line with approved guidelines,” he said.

In the course of following up on the implementation of the aforementioned new policies, the CBN observed some pushback by some of the IMTOs who were bent on undermining the new policies.

CBN Director, Trade & Exchange Department, O.S. Nnaji, said the new policy is expected to liberarise, simplify and improve receipt and administration of diaspora remittances into Nigeria.

According to Nnaji, recipients of such IMTOs remittances have the option of receiving these funds in foreign currency cash or into their domiciliary account.

“These changes are necessary to deepen the foreign exchange market, provide more liquidity and create more transparency in the administration of Diaspora remittances into Nigeria,” Nnaji said.

“In addition, these changes would help finance a future stream of investment opportunities for Nigerians in the diaspora, while also guaranteeing that recipients would receive a market reflective exchange rate for the market.”

In another circular to authorised dealers, the CBN clarified that following different interpretations on the operationlisation of domiciliary accounts and to ensure the stability of the foreign exchange market, export proceeds domiciliary accounts will continue to be operated on existing regulations.

The regulators allow account holders use their funds for business operations only, with any extra funds sold in Investors’ & Exporters’ window.

Also, where domiciliary accounts are funded by electronic transfer or wire services, account holders will be allowed unfettered and unrestricted use of the funds for eligible transactions.

It said that where accounts are funded by cash deposits, existing regulations will continue to apply.

“These clarifications are necessary given the vastly improved capabilities of the Central Bank of Nigeria to monitor transactions, forestall money laundering and prevent adverse effects of dollarization of the economy, adding that Bank Verification Number will be used to enforce compliance,” the apex bank said.

The CBN has asked banks to close all naira general ledgers through which the naira remittances were hitherto being carried out. To ensure smooth implementation, the apex bank engaged with the commercial banks and the IMTOs to ensure that recipients of remittance inflows are able to receive their funds in the designated foreign currency of their choice.

Emefiele assured Nigerians both at home and in the Diaspora, that all the IT systems of these IMTOs (Western Union, Moneygram and Ria services) and the commercial banks have been properly configured and have commenced remittances.

“These new policy measures would help in providing a more convenient channel for Nigerians in the Diaspora to remit funds back to Nigeria, as well as ensure that these funds can contribute to the overall development of our economy,” he said.

Diaspora remittances policy flouted

Despite the gains of implementing the new policy, some IMTOs are flouting the new rule by continually paying beneficiaries in naira.

In a statement , the apex bank said few operators continue to pay remittances in local currency contrary to regulatory directive.

The apex bank therefore issued a new directive, where it mandated that Switches and Processors should immediately cease all local currency transfers in respect of foreign currency remittances through IMTOs.

It also directed that all Mobile Money Operators should immediately disable wallets from receipt of funds from IMTOs.

Again, Payment Service Providers are directed to stop integrating their systems with IMTOs going forward and must prevent combining remittances with other legitimate transactions.

According to the apex bank, all IMTOs are required to immediately disclose to beneficiaries that they exercise discretion to receive transfer in foreign currency cash or directly into their domiciliary accounts.

The apex bank has also instituted a central reporting portal for all foreign remittances to be managed by the Nigeria Interbank Settlement System (NIBSS), which is under development to improve visibility of foreign remittances flow.

“All licensed institutions are required to comply with the new guidelines as contraventions will attract stiff regulatory sanction including revocation of license,” the apex bank said.

The apex bank said it remained committed to promoting transparency in the administration of Diaspora remittances into Nigeria and will continue to enforce policies that will stabilise and deepen the Nigerian foreign exchange market.

The CBN also warned the general public to beware of two firms: Azimo, Transfer Wise which are operating as IMTOs.

According to the apex bank, the two firms are not licensed to carry out the business.

It said: “ Our attention has been drawn to the activities of Messrs. Azimo and Messrs. Transfer Wise, both of which are purportedly transacting business, albeit un-authorised, as International Money Transfer Operators (IMTOs)”.

“The CBN wishes to notify the general public that neither Messrs. Azimo nor Messrs. Transfer Wise is licensed by the Central Bank of Nigeria to operate as an International Money Transfer Operator (IMTO)”.

“The Public is therefore advised to beware of the activities of Messrs. Azimo and Messrs. Transfer Wise and desist from patronizing the companies forthwith. Anyone who patronizes the unregistered companies, does so at his or her own risk”.

Finally, crude oil has for long, remained the mainstay of Nigeria’s economy. Although it accounts for over 90 per cent of Nigeria’s foreign exchange (forex) earnings, the unpredictability of oil prices raises the risk of relying solely on it for Nigeria’s revenue.

That explains why the CBN’s new policy is timely and expected to help attract more Diaspora remittances and other foreign capital that will not only deepen the market, keep the naira stable but also supported beneficiaries’ families.

Analysts insist that the CBN’s new policy would also harness remittances into generating capital for productive investments for the growth and development of small and micro-enterprises, which will in turn, create employment was required.

In addition, remittances can be deployed toward philanthropic activities which can serve as solutions for specific deficiencies in the local infrastructure such as schools, hospitals and roads.

Indeed, remittances are on track to become the largest source of external financing in developing countries and Nigeria cannot be left behind.

– The Nation

Leave A Reply

Your email address will not be published.

%d bloggers like this: