Why the CBN approved new International Money Transfer Operators (IMTOs)

The Central Bank of Nigeria (CBN) has granted approval in principle to 14 new international money transfer operators (IMTOs) as part of a strategic move to double foreign exchange remittances, spur economic growth, and lower transaction costs. This initiative comes in response to a noted decline in diaspora remittances during the first quarter of 2024.

IMTOs facilitate cross-border fund transfers for individuals and entities abroad, sending money to beneficiaries in Nigeria. The approval in principle, a conditional acceptance pending final authorization requirements, reflects CBN’s efforts to enhance foreign currency remittance flows through formal channels.

CBN’s acting director of corporate communications, Hakama Sidi Ali, announced the approval in Abuja on Wednesday, May 15, 2024. Ali highlighted that this move is expected to sustain foreign exchange supply in the official market by promoting increased competition and innovation among operators, which should reduce remittance transaction costs and improve financial inclusion.

“This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira,” she stated.

The CBN’s decision aims to mitigate the historical volatility in Nigeria’s exchange rate, which is often influenced by external factors such as fluctuations in foreign investments and oil export revenues.

CBN Governor Olayemi Cardoso emphasized the bank’s collaboration with IMTOs to collectively commit to doubling remittance flows through formal channels into Nigeria. Cardoso also mentioned the establishment of a task force to address challenges hindering these flows.

In the first quarter of 2024, Nigeria recorded $282.61 million in direct forex remittances. This new initiative by the CBN is expected to significantly increase this figure, stabilizing the foreign exchange market and bolstering the Nigerian economy.