On June 15,2023, the Central Bank of Nigeria (CBN) released to International Money Transfer Operators (IMTOs) and the general public a new set of directives in its efforts to liberalize the payout of Diaspora remittances and promote the adoption of the E-Naira , consequently establishing it as a payment option to recipients of Diaspora remittances.
This article will be looking at the provisions of this circular and what it means for the Fintech sector, particularly the Cryptocurrency & Digital Assets subsector.
What are IMTOs required to do to effect E-Naira payment options in their services?
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– IMTOs are to apply for a one-time “No objection” to pay out in E-Naira from the CBN.
– The CBN shall provide account details where foreign currencies from IMTOs shall be received.
– IMTOs are required to then open merchant wallets through the CBN.
– Next, IMTOs are to prefund the CBN account with foreign currencies.
– Then, the CBN will subsequently fund the IMTO merchant wallets with E-Naira equivalents of the foreign currencies earlier pre-funded by the IMTOs.
What is the payment procedure for the end-user/beneficiary of an FX/E-Naira Diaspora remittance transaction?
– A sender initiates a diaspora transfer with an IMTO of his choice overeseas providing details of the beneficiary’s wallet.
– The IMTO logs into the E-Naira web wallet portal, debits Its E-Naira merchant wallet and credits the beneficiary with the E-Naira equivalent of the FX sent at origin using the I & E rate.
– Alternately, the IMTO integrates with the E-Naira portal from its platform via an API provided by the CBN and initiates transfer of E-Naira equivalent of FX sent at origin at the I & E Window rate.
Are E-Naira payouts for Diaspora remittances compulsory?
It should be noted that the receipt of proceeds of diaspora remittances in E-Naira is optional & shall run concurrently with the USD payment option put in place by the CBN.
Does this mean that Cryptocurrencies have been established as legal tender in Nigeria?
No, this simply means that the classification of Naira has gone beyond hard cash or paper currency and now includes what is called digital fiat or a stablecoin in the form of E-Naira.
This does not mean that Cryptocurrencies are illegal in Nigeria, they are simply not legal tender but decentralized digital assets and banking transaction support is not yet approved by the CBN. But these digital assets can be traded on in Nigeria and used internationally.
Will E-Naira payment options also apply to other financial service companies such as Payment Service Providers?
Yes they do, but there are currently no specific E-Naira registration options for other financial institutions except where they register as merchants which would qualify them for merchant wallets.
Must one be a licensed IMTO to be able to render diaspora remittance services?
Yes , IMTO licensing is compulsory but you can consult a lawyer on legal & less expensive means of operating licensed remittance services in Nigeria.