Emefiele Lists Benefits of ‘Naira 4 Dollar Scheme’ for Diaspora Remittances

•New incentive scheme to last for 60 days, supports forex stability
•Osinbajo commends new FX policy

Obinna Chima and Nume Ekeghe

Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, yesterday highlighted the benefits of the newly introduced “CBN Naira 4 Dollar Scheme,” an initiative aimed at incentivising senders and recipients of international money transfers. Emefiele spoke at a webinar organised by Fidelity Bank Plc, entitled, “The New FX Policy, Implications and Positive Impact on Diaspora Investments,” where he delivered a keynote speech.

The CBN governor explained that the new policy was expected to attract diaspora remittances through the official foreign exchange channels as well as support forex stability in Nigeria.

The CBN had earlier in a circular dated March 5, 2021, signed by A.S. Jibrin, on behalf of the Director, Trade and Exchange Department, and released yesterday, stated that the new initiative would become effective on Monday and Saturday, May 8, 2021. In line with this initiative, all recipients of diaspora remittances through CBN’s licensed International Money Transfer Operators (IMTOs) shall henceforth be paid N5 for every $1 received as remittance inflow.

The apex bank explained in the circular, “The CBN shall through commercial banks, pay to remittance recipients the incentive of N5 for every $1 remitted by sender and collected by the designated beneficiary.

“This incentive is to be paid to recipients whether they choose to collect the United States dollar as cash across the counter in a bank or transfer same into their domiciliary account. In effect, a typical recipient of diaspora remittances will at the point of collection, receive not only the USD sent from abroad, but also the additional N5 per USD received.”
Providing more insight into the new policy, Emefiele said it would offer Nigerians in the diaspora a convenient way to send remittances, adding that it would also aid diaspora investments.

He explained, “Our policy on the administration of remittance flows is aimed at increasing the transparency of remittance inflows, reducing rent-seeking activities, and providing Nigerians in the diaspora with cheaper and more convenient ways of sending remittances to Nigeria.
“In addition, we believe that this new policy measure will encourage banks and financial institutions to develop products and investments vehicles geared towards attracting investments from Nigerians in the diaspora. We have no doubt that these changes can help to finance a future stream of investment opportunities for Nigerians living abroad.”

However, Emefiele said, “Yet, the introduction of the new policy presented new challenges, as operators and remittance service providers were initially unable to integrate with the agent banks.” He said the central bank would continue to work to resolve the intermittent interface challenges in the marker.

Emefiele disclosed that the average cost of sending $200 worth of remittance to Nigeria from the US was about 4.7 per cent, saying studies have shown that even a one per cent decrease in cost of sending remittance can result in a significant boost in inflow.
He added, “Countries in South Asia, such as Pakistan and Bangladesh, are aware of this impact and they introduced reimbursement schemes to support inflows.

“In Pakistan, the scheme, which is known as free send, has enabled record amount of inflows of over $2 billion a month even during the COVID-19 pandemic. Bangladesh introduced its own scheme in June 2019, which is a two per cent rebate on remittance inflows. Following this action, they have also seen a 20 per cent boost in remittance inflows.

“On the topic of round tripping, there is a maximum amount that you can remit through an IMTO. You can’t send a $100,000 through an IMTO. The CBN’s action, while it does not go far enough in offering total reimbursements, is a step in the right…