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CBN’s N5 reward for every diaspora dollar inflow begins today

By Chesa Chesa

The Nigerian Government’s latest policy to reward every diaspora dollar inflow with N5 (five naira) additional payment, tagged “Naira 4 Dollar”, kicks off today.

The decision is aimed at maximising foreign exchange flows from Nigerian citizens abroad – currently over $30 million weekly – and will run from March 8 till May 8, 2021.

According to the Central Bank of Nigeria (CBN), recipients of diaspora flows who use formal channels to get U.S. dollars from abroad, will be paid N5 for every dollar received.

The N5 will be in addition to the proceeds of the dollar cash sent, which is the latest move by authorities to increase the flow of remittances amid a shortage of hard currency.

Recipients will get N5 naira for every $1 they remit through licensed international money transfer operators and commercial banks.

The incentive, tagged “Naira 4 Dollar Scheme”, was announced in a circular signed by Saleh Jibrin, CBN‘s Director, Trade and Exchange Department.
Jibrin said that beneficiaries would get the incentive, whether they collect the remitted dollars as cash across the counter or through their domiciliary accounts.

He instructed all commercial banks and International Money Transfer Operators (IMTOs) to ensure that the scheme takes effect from Monday.
“In an effort to sustain the encouraging inflows of diaspora remittances into the country, the CBN hereby announces this scheme as an incentive for senders and recipients of international Money Transfers.
“All recipients of diaspora remittances through CBN licensed IMTOs shall henceforth get N5 for every one US dollar received.

“This incentive is to be paid to recipients whether they choose to collect the dollar as cash across the counter in a bank or transfer the same into their domiciliary account.
“Having discussed with banks and IMTOs, the scheme takes effect from Monday, March, 8″, he stated.
In December 2020, the apex bank had directed commercial banks to begin the Diaspora remittance policy, enabling bank customers to cash out money sent to them from abroad in dollars through MoneyGram, Western Union Money Transfer, among other international money transfer platforms.

The latest move is to further promote Diaspora remittances started in January 2021.
According to the CBN, the weekly Diaspora remittances figure to Nigeria is over $30 million.
This is said to be about a 500 per cent increase from the $5million before the Diaspora remittances scheme was introduced.
Commenting on the move in a Diaspora webinar series, CBN Governor Godwin Emefiele stated: “We need to amplify the essence of the policy to reduce the cost burden of remitting funds to Nigeria by Nigerians in the Diaspora.
“First of all, for example, the average cost of sending $200 worth remittances to Nigeria from the US is roughly 4.7 per cent. Studies have shown that even a 1 per cent decrease in the cost of sending remittance can result in a significant boost in inflows.”
He noted that countries like Pakistan and Bangladesh were aware of this impact after introducing reimbursement schemes to support inflows.

The Naira has been devalued twice since March last year after a sharp drop in oil sales and remittances from workers abroad led to a shortage of dollars.
Measures by the central bank to bolster inflows and a rebound in oil prices can reduce pressure on the currency, which last traded at N411 per dollar at the exchange platform for investors and exporters known as Nafex.

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