CBN claims its new foreign exchange policy has boosted diaspora remittances by $5m a week

WEEKLY remittances from Nigeria's diasporans has increased by $5m over recent weeks to $30m a week as a result of changes in government policy according to the Central Bank of Nigeria (CBN) governor Godwin Emefiele.

With the Nigerian economy in dire straits as a result of the global economic meltdown precipitated by the coronavirus pandemic, the country is becoming increasingly dependent on diaspora remittances. Diaspora remittances are currently the biggest source of foreign exchange in Nigeria today, with about $25bn being sent in annually.

However, up until last year, recipients were only able to collect their cash in naira but with there currently being a chronic scarcity of foreign exchange in Nigeria, the CBN  altered its policy, saying transactions that are eligible under the new law are in line with global best practices. In December 2020, last year, the CBN instructed all international money transfer operators to allow recipients of remittances to have the option of receiving their money in foreign exchange if they so desired.

Speaking on Friday at a CBN/Bankers Committee’s initiative for economic growth, Mr Emefiele said the new policy had an immediate impact. Attended by stakeholders from the financial sector with state governors and other dignitaries attending virtually, the event was titled How to Overcome the Pitfalls of recession : Bankers Perspectives on an Enduring National Growth Path.

Mr Emefiele said: “The CBN has already taken several measures to increase the flow of diaspora remittances into the country using formal channels. In December 2020, we instructed all international money transfer operators to provide remitters with the option of sending foreign exchange to beneficiaries in Nigeria.

“This new measure has helped to reduce the diversion of forex by some international money transfer operators, who had thrived from arbitrage arrangements, rather than on improving transactions volumes to Nigeria. Indeed, we have already seen remittances improve from a weekly average of about $5m before this policy, to over $30m per week.

“We believe this measure will help to significantly boost inflows of forex and create much more liquidity in that space.” He added that with the decline in Nigeria's foreign exchange earnings and subsequent adjustments in the value of the naira vis-à-vis the dollar, the CBN had continued to implement a demand management framework.

This, Mr Emefiele noted, was designed to support improved production of items that could be produced in Nigeria and further conservation of the country’s external reserves. These measures, he noted, had helped to prevent a significant decline in the reserves.