The Central Bank of Nigeria (CBN) has introduced new measures aimed at enhancing naira liquidity and increasing diaspora remittances. According to a circular issued on Tuesday, the apex bank announced that eligible International Money Transfer Operators (IMTOs) will now have access to naira liquidity through the CBN’s window.
This initiative is designed to improve the accessibility of local currency liquidity, ensuring smoother and more efficient settlement processes for remittances. Transactions conducted before noon on a trading date will be settled on the same day, as stated by W. J. Kanya, the acting director of the trade and exchange department at the CBN.
All participants in this sector, including IMTOs, authorized dealer banks, and the CBN, are required to submit daily regulatory returns containing comprehensive information on the sources of funds. Under the new guidelines, IMTO operators will have direct access to the CBN window or can choose to go through their Authorized Dealer Banks (ADBs) to carry out foreign exchange transactions in the market.
The circular outlines specific compliance measures to ensure the smooth operation of this initiative. Pricing on the CBN portal will align with the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) traded rates, which are based on a widely accepted market benchmark. The operation of this segment will follow existing arrangements for authorized dealers involved in foreign portfolio investment in primary market securities auctions.
These measures are effective immediately, underscoring the bank’s commitment to maintaining the efficient functioning of the foreign exchange market and enhancing formal remittance channels. This decision is expected to significantly improve the liquidity of the local currency for diaspora remittances, thereby enhancing the overall efficiency and reliability of the foreign exchange market in the country.
The CBN has been actively focused on increasing remittances and naira liquidity, as evidenced by the approval-in-principle (AIP) granted to 14 IMTOs in May 2024, with the goal of doubling foreign-currency remittance inflows through formal channels.
“This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira,” said Hakama Sidi Ali, CBN’s Acting Director of Corporate Communications, in a statement announcing the new plan.
CBN Governor Olayemi Cardoso recently shared the central bank’s goal to double the amount of money sent to Nigeria from abroad in the next year, a target he is confident can be achieved.
“We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. We have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry,” he said.
