CBN’s hammer dangles on IMTOs still paying remittances in naira

THE Central Bank of Nigeria has vowed it will ‘hammer’ via sanctions, International Money Transfer Operators (IMTOs) that are still, despite its directive, paying remittances in the local currency, naira.

The bank had in December 2020 directed that IMTOs and commercial banks in the country to pay beneficiaries of diaspora remittances in foreign currencies, in a bid to deepen the foreign exchange market and create transparency in the administration of diaspora remittances into Nigeria.

It later warned the operators and banks still paying remittances in naira despite the directive and threatened “stiff consequences” against those caught doing so.

Since the takeoff of the new policy, the naira, which had previously taken a plunge in the parallel market amidst low forex supply, has managed to remain relatively steady at about N470 to the dollar for weeks.

Operators such as Western Union, Moneygram, and World Remit that previously paid beneficiaries of remittances in naira, have largely complied, helping to increase dollar supply in the country.

However, in its memo Friday, the central bank said some IMTOs and unlicensed companies have continued to pay diaspora remittances into the country in naira, in clear contravention of its directive that all remittances be paid to beneficiaries in dollars.

The regulator said strict sanctions, “including withdrawal of operating licenses, shall be imposed on any individuals and/or institutions found to be aiding, abetting or directly contravening these guidelines.

“For unlicensed operators, the CBN shall not hesitate to authorize the closure of their accounts in Nigerian banks, including being barred from accessing banking services in Nigeria,” the bank said.

A total of $24 billion is expected annually as remittances from citizens in diaspora, following the introduction of Diaspora Foreign Exchange Remittances Policy by the Central Bank of Nigeria.

According to the CBN Boss, Mr. Godwin Emefiele, the target is predicated on the inflows accruable to countries that have similar demographic features with Nigeria, such as Pakistan, which often receives about $2 billion monthly from their citizens in diaspora.

Diaspora Foreign Exchange Remittances Policy took off from December 4, 2020, and to block any possible loophole or sabotage, the CBN had ordered all DMBs to close all their Naira General Ledger, through which the naira remittances were being carried out.

The target of annual remittance inflow of close to $24 billion is expected to  help improve the country’s balance of payment position, reduce her dependence on external borrowing, and mitigate the impact of COVID-19 on foreign exchange inflows into the country.

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