In a bid to boost diaspora remittances and promote the smooth functioning of the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) has implemented measures to allow eligible International Money Transfer Operators (IMTOs) access to naira liquidity at the official window.
Gatekeepers News reports that the new measures aim to widen access to local currency liquidity for the settlement of diaspora remittances, according to a circular released by the CBN on Monday. This move is part of the regulator’s commitment to enabling greater remittance flows through formal channels.
The CBN explained that eligible IMTOs will now be able to access the CBN window directly or through their Authorized Dealer Banks (ADBs) to execute transactions for the sale of foreign exchange in the market. This means that IMTOs, which were previously not active players in Nigeria’s FX market, can now participate in the market.
The CBN outlined rules to guide the process, including same-day settlement for transactions executed before 12 noon on a trading date. Pricing on the CBN portal will reflect NAFEX traded rates observable on an acceptable market benchmark.
The regulator also emphasized the importance of regulatory returns, which must be submitted daily by all participants. These returns must contain relevant information on the sources of funds.
The CBN’s move is seen as a significant step towards enhancing diaspora remittances, which have been a crucial source of foreign exchange earnings for Nigeria. In February, the CBN asked IMTOs to only make naira payments to recipients in Nigeria, removing the allowable limit of the FX rate quoted for such transactions.
The financial regulator has been collaborating with IMTOs to increase remittance flows through formal channels into Nigeria. On April 20, CBN Governor Olayemi Cardoso announced that the regulator had been working with IMTOs to collectively commit to doubling remittance flows through formal channels.
Furthermore, the CBN granted approval in principle (AIP) to 14 new IMTOs on May 15, a move aimed at increasing competition and improving services in the remittance market.
The CBN’s latest measures are expected to promote transparency, encourage competition, and increase supply in the FX market. The move is also seen as a positive development for recipients of diaspora remittances, who will now have access to a more competitive and transparent market.
