As part of its core responsibility to ensure monetary/price stability and promote a sound financial system in Nigeria, the Central Bank of Nigeria’s new ‘Naira 4 Dollar Scheme’ as announced last week is set to shore up the government’s revenue base by encouraging increase in inflows of diaspora remittances into the country.
The new ‘Naira 4 Dollar Scheme’ offers recipients of diaspora remittances through CBN’s International Money Transfer Operators, IMTOs to be paid ₦5 for every $1 received as remittance inflow.
This development disclosed by CBN last week in a circular issued to all Deposit Money Banks (DMO) and IMTO is scheduled to take effect today Monday, March 8, 2021, and ends on Saturday, May 8, 2021.
However, professionals in the industry on analysis of the new policy have projected that the policy may increase the country’s foreign remittances to $34.89bn by 2023.
Taxmobile.Online learnt from a forecast by PricewaterhouseCoopers, PwC that the growth in remittances is subject to global economic forces, which could spur or hinder the growth of remittance flows, growth in emigration, economic conditions of residing countries, and poor economic fundamentals in the Nigerian economy.
The forecast revealed that as of 2017, the highest remittance came from the United States, followed by the United Kingdom, Cameroon, Italy, Ghana, Spain, Germany, Benin Republic, Ireland, and Canada.
PwC added that,
“Several countries across the globe, including Nigeria, have developed plans towards attracting investment from their diaspora community for national development. Essentially, the extent to which the diaspora contributes to the developmental affairs of a country will be determined largely by trust.
“In summary, what is required is a coherent policy framework to harness remittances into generating capital for productive investments for the growth and development of small and micro-enterprises, which will, in turn, create employment. Also, remittances can be deployed toward philanthropic activities, which can serve as solutions for specific deficiencies in the local infrastructure such as schools, hospitals, and roads.”
CBN’s Governor expounded,
The Central Bank Governor, Godwin Emefele, has explained that this rebate will be provided to the bank accounts of beneficiaries, following receipt of remittance inflows.
The CBN boss also assures that efforts at driving remittance inflows into Nigeria would yield positive results as it continued to ensure formal banking channels offer cheaper, faster, and more convenient ways for remitters to send funds to beneficiaries.
The experienced banker has also submitted that reducing the cost of sending remittances was a significant way to boost remittance inflows to Nigeria.
In general, he said, the new policy was expected to enlarge the scope and scale of foreign exchange inflows into the country with a view to stabilisng the exchange rate and supporting accretion to external reserves.
In other comments on the effect of this policy,
“We believe this new measure will help to make the process of sending remittance through formal bank channels cheaper and more convenient for “Nigerians in the diaspora. This new policy is expected to take effect on the 8th of March 2021.”
“Today, the World Bank data shows that Nigeria, with a total flow of $21bn, was the seventh-largest recipient of remittances in 2019.
“This is behind India, China, and even Egypt. Though official remittance flows declined in 2020 due largely to the undermining impact of the Covid-19 pandemic, it maintained its dominance over FDI inflows.”
Consistent with the global trend, Nigeria aspires to ensure that remittance flows and diaspora investment becomes a significant source of external financing.
“Policy on the administration of remittance flows is aimed at increasing the transparency of remittance inflows and providing Nigerians in the diaspora with cheaper and more convenient ways of sending remittances to Nigeria.