The Central Bank of Nigeria (CBN) has said that its new “CBN Naira 4 Dollar Scheme” which comes into effect on Monday (today), is aimed at providing Nigerians in the Diaspora with cheaper and more convenient ways of making remittances to their home country.
The CBN Governor, Mr. Godwin Emefiele, stated this at the weekend while delivering a keynote address at the Fidelity Bank’s inaugural Diaspora Webinar on the Implications and Impact of the New FX Policy on Diaspora Investments.
Emefiele explained that the move was also to increase the transparency of remittance inflows and reducing rent-seeking activities even as he expressed optimism that the new policy will encourage banks and financial institutions to develop products and investment vehicles, geared towards attracting investments from Nigerians in the Diaspora.
Citing cases in other climes, Mr. Emefiele 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 cost of sending remittance 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 record amount of inflows of over $2billion a month even during the COVID pandemic.
Commenting on the issue of round-tripping, CBN’s Ag. 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.
Meanwhile, following the “Naira 4 dollar scheme” introduced in a recent circular to Deposit Money Banks (DMBs) by the Central Bank of Nigeria (CBN), experts have said the scheme could boost the country’s diaspora remittances and investments.
PwC forecasts suggest that Nigeria’s remittance flows could reach $34.89 billion by 2023. But this can only be accomplished if remittance infrastructure improves and if the right policies are put in place. The use of reimbursements of remittance fees has 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”, he said.
According to him, efforts at driving remittance inflows into Nigeria would yield positive results as it continues to ensure formal banking channels offer cheaper, faster and more convenient ways for remitters to send funds to beneficiaries.
Chairman, Nigerians in Diaspora Commission (NIDCOM), Mrs Abike Dabiri-Erewa, said the policy will positively impact on diaspora remittances into Nigeria.
She however, appealed to the CBN to reduce the cost of remittances as Nigeria is the only country charging the highest percentage compared with other countries. Earlier in her opening remark, the Chief Executive Officer, Fidelity Bank Plc, Nneka Onyeali-Ikpe, noted that inflows or remittances are a very important segment that Nigeria cannot lose sight of. Onyeali-Ikpe stated that the impact of the diaspora inflows and remittances would have a multiplier effect in consumption, investment and economic growth in Nigeria and added that diaspora remittances could be the new oil for Nigeria.
She thereafter said that Fidelity Bank is in full compliance with the CBN’s policy and is working with 17 of its international monetary transfer operators (IMTOs) to ensure that they are in full compliance of the modalities stated by the government.