The Central Bank of Nigeria (CBN) new policy that allows unhindered access to Diaspora remittances, which takes effect today is creating a bit of excitement. The Governor of Nigeria’s Central bank, Mr Godwin Emefiele, spoke yesterday at a press conference in Abuja where he disclosed that the policy released last Monday would take effect today.
Following the announcement, the CBN, in an effort to enable smooth implementation had engaged with the commercial banks and the International Money Transfer Operators (IMTOs) to ensure that recipients of remittance inflows are able to receive their funds in the designated foreign currency of their choice. He stated that as a result of the CBN’s engagements with major IMTOs and the DMBs yesterday, the stakeholders had committed that they would deploy all the necessary tools to “ensure that these measures become effective from Friday, December 4, 2020.”
Emefiele told journalists in Abuja that the new policy would help in providing a more convenient channel for Nigerians in the Diaspora to remit funds to the country as well as ensure that the funds can contribute to the development of the economy. “I, therefore, seize this opportunity to announce to Nigerians both at home and in the Diaspora that the policy of recipients receiving their monies from abroad kicks off on December 4, 2020. All the IT systems of these IMTOs (Western Union, MoneyGram and Ria Services) and the DMBs have been properly configured to begin remittance tomorrow, Friday, December 4, 2020,” the CBN top boss said.
He said the CBN’s policy to allow for unfettered access to foreign exchange from the Diaspora and other money transfer remittances is to support improved remittance inflows into the country through official channels. Emefiele said the current annual remittance inflow of about $24 billion could help in improving the balance of payment position, reduce dependence on external borrowing and mitigate the impact of coronavirus (COVID-19) on forex inflows into the country.
He, however, said following up on the implementation of the new forex and Diaspora remittance policies, the CBN observed some pushback by some of the IMTOs, which he said were bent on continuing their nefarious activities of undermining the new policy by attempting to resist it. He said: “This was the reason the CBN had to insist on Wednesday, December 2, 2020, that all DMBs must close all naira general ledgers through which the naira remittances were hitherto being carried out.
“Based on this premise, we analysed data on IMTO inflows into the country over the past year, and through our investigations, discovered that some IMTOs, rather than compete on improving transaction volumes and create more efficient ways for Nigerians in the Diaspora to remit funds, resorted to engaging in arbitrage arrangements on the naira-dollar exchange rate, which to a large extent resulted in a significant drop in inflows into the country.
“It also encouraged the use of unsafe unofficial channels, which also supported diversion of remittance flows meant for Nigeria, thereby undermining our foreign exchange management framework.” Emefiele explained that in an effort to boost remittance inflows and foster an environment that would enable a faster, cheaper and more convenient flow of remittances back to Nigeria, the CBN had on November 30, announced a new policy initiative, which would help to support these objectives.
He added that the new policies will be a major game-changer in remittance inflows into the country. He said: “As a matter of fact, from the data that we have, the way the size of remittance is computed by the International Monetary Fund (IMF) takes into consideration, not just the money that comes in directly as flows but also what we call the earnings of Nigerians in Diaspora in different parts of the world – because they believe and we believe as well that some portion of these monies actually flow back home to support members of their families.
“But it is important for me to draw a parallel. I am aware from data available that for instance, Pakistan even in the midst of COVID-19 receives $2 billion monthly from Pakistanis in Diaspora. This is a country that I will say by geography, demography is about the same with Nigeria.
“So we are hereby saying that if Nigeria is even able to receive even if it’s just $1 billion monthly or $2 billion monthly, I am so damn certain that you all know what will happen to the exchange rate of Nigeria.” He said he was certain that after some time, deposit money banks will not have any need to call on the central bank to provide dollar to fund their imports or commercial operations.
Emefiele also dispelled concerns that the new policies could support money laundering, adding that the institutions involved in money transfer have good reputation as well as a robust customer identification system in the country.
He said: “I want you to know that even from abroad, where these funds are coming, that is why we talk about institutions that are tested like Western Union, Ria and MoneyGram, which also in those countries where they are domiciled are properly licensed and regulated and I know for certain that countries, where they are domiciled, would not allow money laundering practices or remittance of funds from those countries into our country to be associated with money laundering.”
He said the CBN would ensure that most of those who would be receiving Diaspora remittances come with some forms of identity card, saying when the transfers started in 1996 with some forms of identification at that time, First Bank was able to ensure that people who were receiving funds were properly identified and could easily be traced talk less of even today where there is BVN.