International Money Transfer Operators (IMTOs) and banks in Nigeria have ceased paying remittances in dollars to their customers. The Central Bank of Nigeria issued revised guidelines on January 31, instructing that all inbound money transfers to Nigeria must be paid in naira through a bank account or in cash at the prevailing foreign exchange market rate. This directive impacts transfers facilitated by Western Union, MoneyGram, Rapidtransfer, Ria, and other CBN-approved IMTOs.
Under the new guidelines, IMTOs are restricted from outbound transfers and are mandated to pay beneficiaries in naira, either in cash or through a bank account, with amounts exceeding the naira equivalent of $200 being credited to the recipient’s bank account. Additionally, banks and financial technology companies are banned from providing international money transfer services but can act as agents for IMTOs.
In response to the CBN directive, IMTOs such as WorldRemit and Sendwave have updated their services to support transfers only in naira, with WorldRemit emphasizing the continuation of their quick, safe, and affordable service despite the currency change.
Aminu Gwadebe, the President of the Association of Bureau De Change of Nigeria, stated that the CBN’s move aims to discourage the dollarization of the economy and ensure that remittances contribute to the country’s economic stability. He noted that diaspora remittances often fulfill personal needs rather than drive development.
Financial and economic experts have called for stringent monitoring by the CBN to ensure compliance with the new directive, emphasizing the importance of eliminating disparities between official and black market exchange rates to curb unethical behavior and arbitrage opportunities.
While some experts believe the CBN’s move will have minimal impact on foreign exchange market liquidity, others see it as a necessary step to address the scarcity of dollars in the economy. Okechukwu Unegbu, a former President of the Chartered Institute of Bankers, supported the policy, citing the scarcity of physical cash in the system as a fundamental reason for paying remittances in naira.
