The Central Bank of Nigeria (CBN) has unveiled a strategic move aimed at doubling foreign-currency remittance flows through formal channels. This initiative involves granting Approval-in-Principle (AIP) to 14 new International Money Transfer Operators (IMTOs), as disclosed by the Bank’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali.
The objective behind this initiative is to bolster sustained foreign exchange supply in the official market by fostering greater competition and innovation among IMTOs. By doing so, the CBN aims to reduce the cost of remittance transactions and enhance financial inclusion within the Nigerian economy.
According to Mrs. Hakama Sidi Ali, this move will not only increase liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX) but also contribute to price discovery, facilitating a market-driven fair value for the naira.
Recognizing formal remittance flows as a significant source of foreign exchange, accounting for over 6% of GDP, the CBN sees this as a crucial step in mitigating the historical volatility in Nigeria’s exchange rate attributed to external factors such as fluctuations in foreign investment and oil export proceeds.
This increase in the number of IMTOs is part of the broader efforts of the CBN’s remittance task force, led by Governor Cardoso. The task force, formed after an executive learning session with IMTOs during the World Bank/IMF Spring Meetings, aims to collaborate closely with the private sector and market operators to enhance the ease of doing business in Nigeria’s remittance ecosystem.
Moving forward, the task force will convene regularly to implement strategies and evaluate the impact of these measures on remittance inflows, signaling the CBN’s proactive approach to addressing challenges and promoting economic stability and growth through enhanced foreign currency remittances.