The Central Bank of Nigeria (CBN) has recently implemented new guidelines that restrict the operations of international money transfer operators (IMTOs) to only inbound transfers, effectively stopping outbound transfers. This marks a significant departure from the previous guidelines, which allowed IMTOs to engage in both inbound and outbound international money transfer transactions.
Under the revised guidelines, IMTOs are now only permitted to accept monies for the purpose of transmitting them to individuals resident in Nigeria. Additionally, they can provide cross-border personal money transfer services, such as transfers for family maintenance or in favor of foreign tourists visiting Nigeria. These services will be targeted towards individual customers and conducted on a “person to person,” “business to person,” and “business to business” basis.
The CBN’s decision to restrict IMTOs to inbound transfers only has several implications. It may impact Nigeria’s foreign exchange market dynamics and remittance landscape. By limiting the outflow of foreign currency, the CBN aims to manage foreign exchange reserves and stabilize the local currency. This decision also enhances the monitoring of international financial transactions and helps prevent illicit financial flows.
However, this move could present challenges for individuals and businesses accustomed to using IMTOs for outbound transfers. They may now need to explore alternative channels to facilitate these transactions.
In addition to restricting outbound transfers, the CBN has also limited foreign currency payouts for international transactions. All inbound money transfers to Nigeria must now be paid in Naira through a bank account or in cash. The exchange rate for the Naira payment will be based on the prevailing rate in the Nigerian Foreign Exchange Market.
Recipients who prefer or require US dollar payouts for international transactions may face difficulties due to potential disparities between the official exchange rate and parallel market rates. This policy may also influence the choice of remittance channels for Nigerians living abroad and sending money home.
Overall, the CBN’s new guidelines for IMTOs signal a significant policy shift with far-reaching implications for Nigeria’s foreign exchange and remittance sectors. While aimed at regulating the financial landscape and ensuring compliance with international standards, this decision may impact how diaspora remittances are received and cross-border financial commitments are met. It could also potentially alter Nigeria’s position in the international remittance market.