CBN unveils ‘naira-4-dollar’ policy, to increase foreign remittance to $34bn

The Central Bank of Nigeria (CBN) has introduced a ‘Naira 4 Dollar Scheme’ for diaspora remittances,  which offers recipients of diaspora remittances through CBN’s IMTOs to be paid N5 for every $1 received as remittance inflow.

The scheme takes effect from Monday, March 8, 2021, and ends on Saturday, May 8, 2021.

This was disclosed by CBN in a circular issued to all Deposit Money Banks (DMO) and International Money Transfer Operators (IMTO).

Forecast by PricewaterhouseCoopers, one of the big four accounting firms, had suggested that Nigeria’s remittance flows could reach $34.89bn by 2023 if the policies were right.

PwC in the forecast noted that the growth in remittances is subject to global economic forces, which could spur or hinder growth of remittance flows, growth in emigration, economic conditions of residing countries and poor economic fundamentals in the Nigerian economy.

The forecast revealed that as of 2017, the highest remittance came from the United States, followed by the United Kingdom, Cameroon, Italy, Ghana, Spain, Germany, Benin Republic, Ireland and Canada.

It added, “Several countries across the globe, including Nigeria, have developed plans towards attracting investment from their diaspora community for national development. Essentially, the extent to which the diaspora contributes to the developmental affairs of a country will be determined largely by trust.

“In summary, what is required is a coherent policy framework to harness remittances into generating capital for productive investments for the growth and development of small and micro-enterprises, which will in turn, create employment. In addition, remittances can be deployed toward philanthropic activities, which can serve as solutions for specific deficiencies in the local infrastructure such as schools, hospitals and roads.”

Nigeria’s Diaspora remittance in 2019 was put at $21bn by the World Bank. Even though the forecast showed that the remittance would have risen to $27.66bn in 2020, experts believe the projection couldn’t have been met due to the impact of the COVID-19 pandemic.

The CBN, which introduced a rebate of N5 for every $1 of fund remitted to Nigeria through International Money Transfer Organisations in its new forex policy, shared PwC’s forecast via its verified Twitter handle on Saturday, saying increased remittances ‘can only be accomplished if the remittance infrastructure improves and if the right policies are put in place.’

As part of its reforms to boost the inflow of foreign currency in the country, the CBN on Saturday introduced an incentive of N5 for every $1 of fund remitted to Nigeria through International Money Transfer Organisations in its new forex policy.

The Central Bank Governor, Godwin Emefiele, disclosed this during a virtual event organised by Fidelity Bank at its inaugural webinar on the impact of the new forex policy on diaspora investments.

Emefiele said this new policy would take effect on March 8.

He said, “Furthermore, in an effort to reduce the cost burden of remitting funds to Nigeria by working Nigerians in the diaspora, the Central Bank of Nigeria has introduced a rebate of N5 for every $1 of fund remitted to Nigeria, through IMTOs licensed by the Central Bank.