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Nigeria banks to start FX payout under new diaspora remittance rules

Published 03/12/2020, 23:04
Updated 03/12/2020, 23:06
© Reuters.

ABUJA, Dec 3 (Reuters) - Nigerian banks will on Friday
commence dollar payout for diaspora inflows and close naira
remittance accounts after the regulator eased money transfer
rules to try to boost forex liquidity in the country, the
central bank said on Thursday.
Rising dollar demand has been putting pressure on the naira.
Importers with obligations have scrambled for hard currency,
while providers of foreign exchange, such as offshore investors,
have exited after COVID-19 triggered an oil price crash..
Nigeria is hoping it can attract more remittances from its
diaspora after central bank on Monday lifted restrictions that
have hindered inflows.
It said the changes will help reduce arbitrage whereby money
transfer operators profit from unofficial channels.
The naira has weakened sharply on the black market since
last month. On Monday, it traded at a 3-1/2 year low of 500
naira to the dollar, widening the premium between the official
market where the currency is stuck at 381 since July.
The central bank said it meet commercial banks and money
transfer operators on Thursday to discuss the changes, which
could help boost Nigeria's balance of payment and reduce its
dependence on foreign borrowing.
Under the new rule, diaspora remittances would be paid in
cash in U.S. dollars or into a domiciliary (foreign-currency)
account at market rates. In the past, remittances were paid in
naira and the bank had restricted domiciliary account usage.
Nigeria is the world's fifth-biggest destination for
international remittances, with 5 million Nigerians living
abroad sending money back to relatives, according to Western
Union.
PricewaterhouseCoopers estimated that diaspora flows into
Nigeria totaled $23.63 billion in 2018, representing 6.1% of
GDP.

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