The Central Bank of Nigeria (CBN) needs US dollars desperately to help cushion the nation’s balance of payment, and fight deterioration of the Naira, and is going to Nigeria’s best export: the diaspora community. Yes, the apex bank has unveiled a really ingenious scheme called “Naira 4 Dollar Scheme”. Largely, if you wire US dollars to Nigeria via the approved IMTO (international money transfer operators) like Western Union, the payout bank will pay your recipient N5 per $I besides the recipient receiving the full amount you wired in US dollars. The CBN Governor mentioned in a Diaspora Series organized by Fidelity Bank Plc.
It is not Christmas or Salah yet but CBN is already loaded to send goodies. Send $1,000, your recipient will receive the $1,000, and extra N5,000, even if the payout is received in cash or domiciliary account. Two things are evident here:
- CBN wants to use this to change habits, pushing diasporas to use the formal channels to wire money home. You will not get this extra credit if you use the non-approved channels. Here, the channels are you must use the approved IMTOs and the destination would be to deposit money banks (the commercial banks). Those running cryptocurrency accounts will not benefit.
- CBN needs US dollars and is hoping that this will make the diasporas to open their wallets and wire money home. If it succeeds, it could be another way to stabilize the Naira, just as crude oil sales help internationally.
According to PwC, remittance to Nigeria was about $23 billion. Certainly, the central bank will not budget to carry such in perpetuity. This explains why the bank has put a window on this; it would begin on Monday 8th March 2021 and end on Saturday 8th May 2021. This is short term but if it is extended over a long time, you can call it a “quasi-devaluation” for the masses who are lucky to have families abroad.
In an effort to sustain the encouraging increase in inflows of diaspora remittances into the country, the Central Bank of Nigeria (CBN) hereby announces the introduction of the “CBN Naira 4 Dollar Scheme”, an incentive for senders and recipients of international Money Transfers.
Accordingly, all recipients of diaspora remittances through CBN licensed IMTOs shall henceforth be paid N5 for every USD1 received as remittance inflow.
In light of this, the CBN shall, through commercial banks, pay to remittance recipients the incentive of N5 for every USD1 remitted by sender and collected by designated beneficiary. This incentive is to be paid to recipients whether they choose to collect the USD as cash across the counter in a bank or transfer same into their domiciliary account.
In effect, a typical recipient of diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional N5 per USD received. Please note having discussed with banks and IMTOs, the scheme takes effect from Monday 8 March 2021 and ends on Saturday 08 May 2021.
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