By Barnabas Esiet.
The Central Bank of Nigeria (CBN) announced this week that it has granted Approval-in-Principle (AIP) to 14 new International Money Transfer Operators (IMTOs) in a bid to double foreign-currency remittance inflows through formal channels.
This initiative aims to increase the supply of foreign exchange in the official market by fostering competition and innovation among IMTOs, ultimately reducing the cost of remittance transactions and promoting financial inclusion.
The CBN sees formal remittance flows as a crucial source of foreign exchange, accounting for over 6% of GDP.
By boosting these flows, the central bank hopes to mitigate the historical volatility in Nigeria’s exchange rate caused by external factors like fluctuations in foreign investment and oil export proceeds.
Hakama Sidi Ali, CBN’s Acting Director of Corporate Communications, stated that this move will enhance liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), leading to fair value for the naira through improved price discovery.
CBN Governor Olayemi Cardoso has set a target to double remittance flows into Nigeria within a year, emphasizing the importance of removing obstacles hindering flows through formal channels.
The CBN is committed to working closely with stakeholders in the remittance industry to achieve this goal.
IMTOs in Nigeria are entities authorized by the CBN to facilitate the transfer of foreign currency funds from abroad to recipients in Nigeria.
The CBN increased the number of licensed IMTOs from 47 to 62 in 2023 as part of its efforts to enhance the remittance ecosystem in the country.
Governor Cardoso oversees a remittance task force that collaborates with specialists, the private sector, and market operators to streamline remittance processes in Nigeria.
This task force was established following discussions with IMTOs during the 2024 World Bank/IMF Spring Meetings in Washington DC.
The task force will continue to implement strategies and monitor the impact of its measures on remittance inflows, ensuring a more efficient and effective remittance system in Nigeria.
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