The Central Bank of Nigeria (CBN) has introduced what it calls “Naira-4-Dollar Scheme” for Diaspora remittances, which offers recipients of Diaspora remittances through CBN’s International Money Transfer Operators (IMTOs) to be paid N5 for every $1 received as remittance inflow.
The scheme takes effect from March 8, 2021, and ends on May 8, 2021.
This was disclosed by CBN in a circular issued to all Deposit Money Banks and IMTO.
The memo was dated March 5, 2021, and signed by the Director, Trade and Exchange Department, A.S Jibrin, and it reads 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 (the) 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.
The initiative is also being supported by commercial banks as we have seen some banks also advertise it to their customers.
It also appears to be an attempt by the CBN to compete with the black market and other unofficial avenues of receiving forex.
In what appears to be an attempt to incentivize dollar remittances by all means possible, the Central Bank of Nigeria (CBN) released a circular to Deposit Money Banks (DMBs), International Money Transfer Operators (IMTO), and the General Public, advising that remittances paid into a bank account will attract an additional credit alert for every USD$1 received!
The CBN will facilitate a special additional credit alert of N5 for every USD$1 received. In other words,
if someone sends you $10,000, you get an additional special credit alert for N50,000.
If someone sends you $100,000, you get an additional special credit alert for N500,000.
▪︎Who is eligible?
To be eligible, the Diaspora remittances need to be processed and received from one of the registered IMTOs and funds received into a Bank account operated by the DMBs. (So, if you are receiving funds via Crypto sorry you are not eligible).
Additionally, the circular says this “incentive runs from March 8. 2021 to Saturday May 8, 2021″. So, if you have plans to receive dollars, you can plan accordingly.
The circular is not clear how exactly the commercial banks will establish which account to pay the extra special credits into.
Although that may be a question that the Diaspora funds recipients will need to ask their DMB accounts officers to clarify for them.
▪︎How will this be funded?
The circular notes that the “CBN shall through commercial banks, pay to recipients the N5 incentive for every USD$1”. In other words, it is the CBN funding the cost of this special extra credit.
One would argue that given the costs of alternative incentives to attract dollars such as the special OMO window for FPI, this may be a cheaper alternative for the CBN.