The Central Bank of Nigeria (CBN) has announced new measures aimed at improving local currency liquidity for the settlement of diaspora remittances.
These measures, detailed in a circular on Monday, will allow eligible international money transfer operators (IMTOs) to access naira liquidity at the official window.
The CBN highlighted that these steps are part of its broader commitment to ensuring the smooth functioning of the foreign exchange (FX) markets and facilitating greater remittance flows through formal channels.
“The Bank has implemented measures that will enable eligible International Money Transfer Operators (IMTOs) access NGN liquidity at the CBN window,” the circular stated. “These measures are aimed at widening access to local currency liquidity for the settlement of diaspora remittances.”
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. IMTOs are companies that provide cross-border money transfer services, facilitating the transfer of funds from individuals or entities abroad to recipients in Nigeria.
Previously, IMTOs were not active participants in Nigeria’s FX market. However, the latest CBN policy change now includes them as key players alongside other participants such as the CBN itself, authorized dealers (financial institutions licensed to trade FX), and clients (retail or corporate entities buying or selling FX).
Rules for Compliance
To guide this process and ensure compliance, the CBN stipulated specific rules:
- Same Day Settlement: Transactions executed before 12 noon on a trading date will qualify for same-day settlement.
- Pricing: The pricing on the CBN portal will reflect NAFEX traded rates, which are observable on an acceptable market benchmark.
- Regulatory Returns: All participants must submit daily regulatory returns to the CBN, containing relevant information on the sources of funds.
- Participants: The participants in this segment include IMTOs, Authorized Dealer Banks, and the CBN.
This circular takes effect immediately.
In February, the CBN mandated that IMTOs only make naira payments to recipients in Nigeria, removing the allowable limit of the FX rate quoted for such transactions. This policy was part of the CBN’s efforts to encourage transparency and foster a more competitive FX market to increase supply into the country.
On April 20, CBN Governor Olayemi Cardoso stated that the financial regulator has been working with IMTOs to collectively commit to doubling remittance flows through formal channels into Nigeria. Furthermore, on May 15, the CBN granted approval in principle (AIP) to 14 new IMTOs.
