Nigeria Halts Dollar Payouts: Remittances Must Be in Naira

Recent directives issued by the Central Bank of Nigeria (CBN) have prompted International Money Transfer Operators (IMTOs) to cease dollar transfers to Nigerians, affecting inbound money transfers. The apex bank’s revised guidelines, effective from January 31, 2024, restrict IMTOs’ operations solely to inbound transfers, disallowing transfers from Nigeria to other countries.

Under the new regulations, IMTOs are mandated to quote exchange rates for Naira payout based on prevailing market rates at Nigeria’s official foreign exchange market. This move aligns with the CBN’s efforts to strengthen the country’s currency and stabilise the Forex market.

Several IMTOs, including Sendwave [sponsored] and WorldRemit [sponsored], have informed customers of the implementation of these directives, urging them to switch to sending transfers in Naira instead of dollars. The shift has prompted significant changes in the services offered by these operators.

Moreover, the CBN’s guidelines require IMTOs to adhere to anti-money laundering regulations and submit to stringent licensing requirements. The application fee for an IMTO license has been increased from N500,000 to N10 million, with an additional annual renewal fee of N10 million. Compliance with these requirements is crucial for IMTOs seeking to operate in Nigeria.

Banks have also begun to comply with the CBN’s directives, informing customers of changes in international money transfer operations. Inbound transfers to Nigeria via approved IMTOs will now be paid only in Naira through bank accounts or in cash at prevailing exchange rates.

While the CBN’s measures aim to curb currency substitution and bolster the country’s forex reserves, they have implications for diaspora remittances and the broader economy. However, stakeholders, including the Association of Bureau De Change of Nigeria, have expressed support for the directives, emphasising the need to discourage dollarization and promote the use of the local currency.

As the CBN continues to implement measures to stabilise Nigeria’s volatile exchange rate, the effectiveness of these directives will depend on robust oversight and compliance from financial institutions and IMTOs alike.

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