The Central Bank of Nigeria (CBN) has reported a 130% surge in remittance inflows, with the figure reaching $553 million in July 2024.
According to the CBN, this milestone represents the highest monthly remittance inflows ever recorded, marking a significant increase from the same period in 2023.
This is according to a statement by Hakama Sidi Ali, the Acting Director of Corporate Communications, on Tuesday, August 20, 2024.
CBN says its policies boost remittance inflows
The CBN credits this surge in remittance inflows to a series of strategic policy measures designed to enhance liquidity in Nigeria’s foreign exchange market.
The statement read: “The Central Bank of Nigeria (CBN) has reported a significant increase in remittance inflows, reaching $553 million in July 2024, a 130 per cent increase from the corresponding period in 2023.
“This figure represents the highest monthly total inflows on record and reflects ongoing efforts by the CBN to enhance liquidity in Nigeria’s foreign exchange market.
“The substantial growth in remittance receipts is attributable to policy measures introduced by the CBN to enhance liquidity in Nigeria’s foreign exchange market. These measures include granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller model, and enabling timely access to naira liquidity for IMTOs.
“Diaspora remittances are a crucial source of foreign exchange for Nigeria, supplementing both foreign direct investment and portfolio investments. The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.”
The CBN also noted that the National Bureau of Statistics (NBS) reported a slowdown in Nigeria’s year-on-year headline inflation rate for the first time in 19 months, signalling the effectiveness of the CBN’s monetary policy tightening measures.
The CBN further expressed its commitment to closely monitoring market conditions and adjusting its policies as needed to ensure the continued flow of remittances, thereby contributing to the stability of the foreign exchange market.
What you should know
In January 2024, the CBN issued a circular that removed the previous cap on exchange rates quoted by International Money Transfer Operators (IMTOs).
Before the circular, IMTOs were required to quote rates within a permissible range of -2.5% to +2.5% around the previous day’s closing rate of the Nigerian Foreign Exchange Market.
By the end of January, the apex bank further released revised guidelines for the operations of IMTOs. The apex bank increased the application fee for an IMTO licence from N500,000 in 2014 to N10 million in the revised guidelines. This is an increase of about 1,900% in about 10 years.
The CBN also established a minimum operating capital requirement for International Money Transfer Operators (IMTOs) at $1 million for foreign entities and an equivalent amount for local IMTOs.
Also, IMTOs were barred from purchasing foreign exchange from the domestic market to fulfil their obligations.
However, with a recent circular, it appears that this ban has been lifted, and IMTOs can now trade on the official market.
The apex bank earlier reached an agreement with International Money Transfer Operators (IMTOs)to set up a Collaborative Task Force to double remittance inflows into the country. The task force formed to double remittance inflows into Nigeria reports directly to Yemi Cardoso, the Governor of the CBN.
Also, the CBN recently granted 14 new Approval-in-Principle (AIP) to IMTOs, according to the Bank’s Acting Director of Corporate Communications, Hakama Sidi Ali.
The Central Bank’s reforms have included streamlining processes, onboarding more IMTOs, and enhancing measures to ensure an increase in the supply of foreign currencies.
These measures have evidently paid off, as evidenced by the increase in remittance inflows.