Experts React, As CBN Relaxes Rules On FX Remittances

Ahead of the Christmas festivities, there is good news for those with relatives based abroad, as the Central Bank of Nigeria (CBN), on Monday directed that beneficiaries of Diaspora remittances through international money transfer operators, henceforth, have the option of receiving their funds in foreign currency cash, or into their ordinary domiciliary accounts.

In a tweet on his personal handle, also on Monday, Mustafa Chike-Obi, pioneer chief executive of the Asset Management Corporation of Nigeria (AMCON), while welcoming the circular as long overdue, believs “it will definitely have a positive impact on DIaspora remittances.

“The contradiction between this policy and the recent criticism of the parallel market must however be clearly addressed,” he added.

There are, however, those who warn that the liberalization effort “creates a money laundering loophole,” means that the CBN has either given up on the parallel market, or wants to use this supply channel to bear down the price in that market.

It also means, they say, that remittance business becomes less lucrative for banks, making them, more or less, mere conduit for remittances just as they may either start buying at Bureau De Change rate (which CBN would not allow), or just appropriately charge fees to compensate for remittance services rendered to customers, and then move on.

According to the circular referenced TED/FEM/FPC/GEN/01/011, dated November 30, 2020 and signed by Dr. O.S Nnaji, its director, Trade & Exchange Department, the move is part of its efforts “to liberalize, simplify and improve the receipt and administration of diaspora remittances into Nigeria.

“In addition, these changes would help finance a future a future stream of investment opportunities for Nigerians in the diaspora, while also guaranteeing that recipients of remittances would receive a market reflective exchange rate for their inflows.

In another circular also on Monday, titled “operations of domiciliary accounts,” ordered that export proceeds domiciliary account holders will use their funds for business operations only, while any extra funds will be sold at the Investors’ & Exporters’ (I&E) window.