Last updated on February 20th, 2024 at 08:41 pm
WorldRemit, MoneyGram, and other International Money Transfer Operators (IMTOs) will cease releasing dollars or other foreign currencies to Nigerians.
Instead, remittances will now be processed and converted to Naira, with the recipient’s account being credited in the local currency.
More than 50 licenced IMTOs are operating in Nigeria, they include Sendwave, MoneyGram, WorldRemit, Remitly, and SimbaPay (the complete list of affected ones here).
Position of CBN on FX inflows
Before now, Nigerians could receive foreign currency inflow in USD, GBP, and EUR from their loved ones abroad, with payments made out in the exact currency to the recipients.
However, the latest development adheres to a directive from Nigeria’s central bank, which now limits IMTOs to processing inflows exclusively in local currency.
Also, Nigerian banks have also blocked Payoneer from processing FX payment directly into Nigeria.
If you were previously able to receive dollars in Nigeria from your brothers, sisters, or family members in the US, UK or Germany, that practice has now stopped.
Instead, your foreign currency will be converted to naira at the prevailing exchange market rate before being paid to you in naira.
This means your brother will still be able to send money to you. However, the option for over-the-counter withdrawal and selling at the parallel market rate has been discontinued. Instead, your local bank account will be credited in Naira.
What the apex bank says about FX outflow
Similarly, Nigeria has also banned IMTOs from facilitating outward transfers of foreign exchange (FX). This means they will no longer be able to process FX transfers from Nigeria to other countries.
Should you be worried about this?
Not too much.
While Nigerian banks can still manage transactions like Personal Travel Allowance (PTA) and Business Travel Allowance (BTA), only IMTOs are restricted from processing FX outflows from Nigeria.
As a result, parents who previously relied on IMTOs to send feeding allowances or emergency funds to their children studying abroad will now need to utilize a bank. They will be required to provide adequate documentation to support their FX application.
IMTOs update their customers about the new FX policy
Meanwhile, the IMTOs have started sending updates about the policy change to their customers.
Sendwave, for instance, says:
“In compliance with a recent directive from the Central Bank of Nigeria (CBN), we regret to inform you that Sendwave, along with all money transfer operators, is no longer able to support USD transfers to Nigeria. We’d encourage you to switch to sending Naira transfers instead.”sendwave
In a similar message titled, “USD – only in Naira” Worldremit promised its customers that it will continue to carry out transactions in Nigeria, but in Naira.
“If you’re about to send money to Nigeria — this is important. The Central Bank of Nigeria (CBN) has directed that it’s no longer possible for any money transfers to be paid out in USD in Nigeria. So that, of course, includes World Remit money transfer.
“But please don’t worry. You can still enjoy the same quick, safe and affordable World Remit service to Nigeria by sending money in Naira instead.”worldremit
Will domiciliary accounts be affected?
While some Nigerians express concern about potential impacts on payments into their domiciliary accounts, the apex bank has reassured that funds in these accounts will not be affected by the new FX policy.
However, over-the-counter withdrawals from domiciliary accounts may be affected, as the Central Bank of Nigeria aims to exert control over FX inflows into the country.
It is also part of the plan to suffocate the operators of the parallel market from accessing foreign currencies.
At the time of this update, 1 $ was exchanged for N1,4781 at the unofficial market popularly called black market rate on February 9, while it closed at $/N1,451.37 at the Nigerian Autonomous Foreign Exchange (NAFEX) February 8, 2024.
Since the incumbent administration took over, the CBN has announced dozens of policy changes from floating to unification of the FX market.
The apex bank is on a mission to rescue the Naira from further depreciation and enhance investor confidence in Nigeria.
However, critics argue that rescuing the Naira without addressing fundamental issues such as production challenges and insecurity could make sustaining the policy difficult.