Apparently to attract more income and boost the country’s economy, the Central Bank of Nigeria (CBN) has introduced a scheme that rewards senders and recipients of international money transfers through CBN licensed International Money Transfer Operators (IMTOs).
In a statement on Friday, the CBN said in the new scheme which begins tomorrow the “Naira 4 Dollar Scheme” will ensure recipients of diaspora remittances are paid N5 for every $1US received as remittance inflow.
The scheme which will end on Saturday, May 8, 2021 will be implemented by all Deposit Money Banks (DMO) and International Money Transfer Operators (IMTO).
But speaking on the CBN initiative to boost foreign exchange transactions, financial experts have urged caution over the apex bank’s initiative, affirming that if not well managed, it may put the economy on a more parlous state.
The memo, dated March 5, 2021, and signed by the Director, Trade and Exchange Department, A.S Jibrin, read in part: “In an effort to sustain the encouraging increase in inflows of diaspora remittances into the country, the Central Bank of Nigeria (CBN) hereby announces the introduction of the “CBN Naira 4 Dollar Scheme”, an incentive for senders and recipients of international Money Transfers.
“Accordingly, all recipients of diaspora remittances through CBN licensed IMTOs shall henceforth be paid N5 for every USD1 received as remittance inflow.
“In light of this, the CBN shall, through commercial banks, pay to remittance recipients the incentive of N5 for every USD1 remitted by sender and collected by designated beneficiary. This incentive is to be paid to recipients whether they choose to collect the USD as cash across the counter in a bank or transfer same into their domiciliary account.
“In effect, a typical recipient of diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional N5 per USD received. Please note having discussed with banks and IMTOs, the scheme takes effect from Monday 8 March 2021 and ends on Saturday 08 May 2021.”
For a financial analyst, Mr Peter Okoh, he that said while the CBN’s policy is commendable, it should be implemented with caution for an economy like Nigeria’s that is mostly import dependant.
Okoh added” Well, while we welcome any realistic policy by the CBN to shore up the value of the Naira by making the Dollar more available to boost Nigeria’s fragile economy, we must, however, be careful not to overestimate the benefits of certain policies in our bid to crash the exchange. I say this, because Nigeria is an import dependent economy, where much Naira chases the Dollar and other international currencies. Unless we boost our export trade sector to generate more foreign exchange, such policies as this CBN Naira 4 Dollar Scheme will remain mere tokenism and may never achieve its desired goal of boosting the economy.”
But while Ade Babolola, an economist agrees with Okoh, he however, said that given the huge yearly foreign remittances into Nigeria, which runs into billions of dollars, the CBN Naira 4 Dollar Scheme is a welcomed development that will further boost the nation’s economy if well managed.
He said that even though the initiative will run for about three months, it will encourage, boost foreign remittances and shore up the value of the Naira, at least technically.
He further explained:” Nevertheless, the policy is still a mix grill, as it may become a disincentive to export trade if not properly managed. The CBN must continue to encourage and ensure diversification of the economy to deemphasize an oil (mono) based economy.”