CBN Eases Money Transfer Rules, Allows Dollar Payments

By Bashir Olanrewaju

Nigerian recipients of international money transfers can now be paid in foreign currencies at banks of their choice, the Central Bank of Nigeria said, in a new rule aimed at easing demand pressures in the parallel market.

Beneficiaries will no longer be obliged to accept the naira equivalent of the transfers at the official exchange rate and could take payments in cash or have it lodged in their dormicilliary accounts, according to a CBN circular on Monday to banks and authorized dealers. These include funds received through Western Union, Money Gram and similar platforms.

“These changes are necessary to deepen the foreign exchange market, provide more liquidity and create more transparency in the administration of diaspora remittances,”  O.S. Nnaji,  CBN’s director of trade and exchange,  said in the statement. ” Beneficiaries shall have unfettered access and utilization to such foreign currency proceeds.”

Diaspora remittances in dollars.

Pressure on Nigeria’s naira, caused by lower crude oil income due to the coronavirus pandemic, is being made worse by a sharp decline this year in remittances.

Funds sent from Nigerians abroad fell by as much as 40 percent in the first half of this years,  as people appeared to avoid official channels, where the exchange rate is more than 20 percent off the parallel rates.

The exchange rate in the unofficial market fell to 500 naira per dollar, the lowest in about four years, as demand pressure continued, likely prompting the central bank into action.