CBN directs banks to pay diaspora remittances to beneficiaries in naira

To use I&E window rate

By Emma Ujah, Abuja Bureau Chief

The Central Bank of Nigeria (CBN) has directed International Money Transfer Operators (IMTOs) to commence remittances pay-out in both Naira and foreign exchange to beneficiaries.

It has also directed that the Investors and Exporters’ (I&E) window foreign exchange rate should be used in determining the exchange rate for Naira pay-outs.

In a circular referenced: FED/FEM/PUB/FPC/001/004 issued by the Director of Trade and Exchange. Dr. Ozoemena Nnaji, dated July 10, 2023, the apex bank said the decision was in furtherance to an earlier circular dated November 30, 2022 with reference number: FED/FEM/FPC/01/011 which provided guidelines on the payout policy of diaspora remittances to beneficiaries.

The November 30, 2022 circular introduced the payment of dollars to beneficiaries of diaspora remittances through the designated bank of their choice and with unrestricted access to their funds.

According to the new circular, the Naira payment was only an option, in addition to United States Dollars and E-Naira in receiving Diaspora remittances.

The Circular reads in full, “Further to the circular referenced FED/FEM/FPC/01/011 dated November 30, 2022 in respect of the above subject, the Central Bank of Nigeria hereby announces Naira as a payout option for receipts of proceeds of International Money Transfers.

“Accordingly, all recipients of Diaspora remittances through the CBN-approved International Money Transfer Operators (IMTOs) on the attached list shall henceforth have the option of receiving Naira payment in addition to USD and e-Naira as payout options.

“For the avoidance of doubt, IMTOs are required to pay out the proceeds using the Investors’ & Exporters’ window rate as the anchor rate on the date of the transaction. The regulation takes effect immediately.”

Recall that CBN had, mid last month, announced the unification of all segments of the Nigerian forex market by collapsing all windows into the Investors & Exporters (I&E) window.

The move was considered part of the new administration’s efforts to improve liquidity and stability in the market by attracting foreign investors into the Nigerian economy.

Further the apex bank stopped the RT200 and the Naira4dollar remittance schemes, last month.

Under scheme introduced in 2021, the CBN, through commercial banks, paid diaspora remittance recipients the incentive of N5 for every USD1 remitted and collected by designated beneficiary.

The Naira4Dollar scheme was to incentivise remittances from Nigerians in the Diaspora and was indeed considered successful, as encouraged more remittances and a steady foreign exchange inflow into the country. The RT200 which comprised a set of plans, policies, and programmes was designed to increase the nation’s earnings exclusively from non-oil exports to $200 billion in foreign exchange repatriation, within the next five years.