How CBN's reforms boosted Nigeria dollar inflows into Nigeria

• The Nigerian economy has experienced forex inflows of over $265 million in five months
• Data from CBN shows that the country saw a 90% surge in diaspora remittances since January this year
• The move is seen as positive for the naira and the broader economy, especially the FX reserve

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.

The Central Bank of Nigeria has reported a $172 million increase in direct remittance in one month.

Data from the CBN shows that remittances hit $138.56 million in January 2024, $39.14 million in February, $104.90 million in March, $193.31 million in April, and $365.44 million in May.

Naira to get a boost CBN records massive remittances into the economy Credit: Novartise
Source: Getty Images

Nigeria witnesses a surge in diaspora remittance

The data shows a 90% surge from April to May, hitting $365.44 million, and a 163% increase, showing a significant growth in foreign currency inflows.

Experts say the development is positive for Nigeria’s economy amid rising debt profile and challenges of revenue diversification.

According to reports, the increase shows the apex bank’s efforts to boost foreign currency remittance flows via formal channels.

CBN grants more licenses to IMTOs

The CBN announced that it has approved in principle 14 new International Money Transfer Operators to enhance remittances, an earlier report by Legit.ng says

The move aims to streamline remittance processes, remove challenges, and encourage the bank’s commitment to boosting official channels.

Punch reports that in January this year, the financial institutions' regulator removed the exchange rate cap earlier imposed by IMTOs to allow for more flexible currency quoting.

The adjustment was devised by revising operational guidelines and raising licensing fees for the operators, which shows CBN’s efforts to enhance the sector's operational mechanisms and financial requirements.

Experts praise the development

Experts see the development as positive for the FX reserve and the Nigerian currency, the naira, saying the two will have some respite to adjust to market realities.

Financial analyst and forex trader Ishaya Ibrahim applauded the move, saying the development portends excellent news for the naira.

“If properly managed, the foreign reserve will be better because it will have some breathing space.“The inflows can also defend the naira instead of dipping hands into the reserve to fight off the naira crash.

He reacted to a recent report that the apex bank has ended FX sales to Bureau de Change (BDC) operators.

“What remains to be seen now is how the funds are properly channeled. But I don't endorse the CBN ending FX intervention for BDCs,” he said.

CBN instructs banks, and IMTOs to pay diaspora remittances in Naira

Legit.ng previously reported the Central Bank of Nigeria (CBN) has asked authorized banks and International Money Transfer Operators (IMTOs) to pay all diaspora remittances in naira.

In a circular, W. J. Kanya, CBN's acting director, noted that the instruction is part of its efforts to enhance the foreign exchange market's efficiency and boost remittance flows through formal channels.

CBN also noted that these measures will access local currency liquidity to settle diaspora remittances promptly.

Source: Legit.ng