Policy to exist for just 60 days in a bid to check round-tripping
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Nigeria’s apex bank Governor, Godwin Emefiele has said that the introduction of the “CBN Naira 4 Dollar Scheme” which comes into effect on Monday, March 8, 2021, is aimed at reducing the cost of remittance inflow, check the activities of round-tripping and also provide Nigerians in the diaspora with cheaper and more convenient ways of sending remittances to Nigeria.
Emefiele, in his keynote address at the Fidelity Bank’s Inaugural Diaspora Webinar on the Implications and Impact of the New FX Policy on Diaspora Investments over the weekend, made this revelation while explaining that the move was also to increase the transparency of remittance inflows and reducing rent-seeking activities. He further stated that in high optimism that the newly introduced scheme will encourage banks and financial institutions to develop products and investments vehicles, geared towards attracting investments from Nigerians in the diaspora.
According to the new circular from the apex bank at the weekend, there is a rebate of N5 for every one dollar of fund remitted to Nigeria through CBN-licensed operator of international money transfer in a bid to incentivize the remittance process as the rebate will be made available to the beneficiaries’ bank accounts following the receipt of remittance inflows. Also, the CBN governor, while citing cases in other climes said the use of reimbursements of remittance fees had been applied in South Asian countries such as Pakistan and Bangladesh to support and improve their balance of payments position following the COVID-19 pandemic.
“Countries in South Asia such as Pakistan and Bangladesh are aware of this impact and they introduced reimbursement schemes to support inflows. In Pakistan the scheme which is known as free send has enabled a record amount of inflows of over $2bn a month even during the COVID pandemic.
“Bangladesh introduced its own scheme in June 2019, which is a 2 per cent rebate on remittance inflows. Following this action, they have also seen a 20 per cent boost in remittance inflows,” Emefiele explained.
Meanwhile, the apex bank stated that the average cost of sending $200 worth of remittances to Nigeria from the United States was about 4.7 per cent; and further citing that studies had shown that even a one per cent decrease in the cost of sending remittance could result in a significant boost in inflows. Also, Emefiele gave the assurance that the CBN would continue to work assiduously to resolve the few challenges such as network integration that were remaining in the process of remitting inflows from the diaspora.
However, Osita Nwanisobi, who is the Ag. Director, Corporate Communications Department of the CBN, while lending his voice to the issue of round-tripping and how the apex bank intends to check on it, he explained that no customer could send $100,000 through an operator of international money transfer as a maximum amount that could be remitted through an operator has been placed.