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A Bold Economic Resurgence: The Central Bank of Nigeria Reapproves Foreign Remittances in NAIRA

22 Aug 2023


The Central Bank of Nigeria has officially announced its decision to reapprove foreign remittances in NAIRA. This strategic move aims to revitalise the nation's economic landscape and offer a boost to both households and Nigeria’s GDP growth. In this regard, every money transfer to Nigeria from overseas made by its global expatriate workers through regulated channels is expected to make a substantial impact.
 

In a highly anticipated move to foster economic prosperity, the Central Bank of Nigeria (CBN) has greenlighted the resumption of foreign remittances in NAIRA, the national currency. This pivotal step has been warmly welcomed by financial analysts, industry leaders, and the general populace, as it promises to re-energise the flow of funds and amplify economic activities throughout the nation.
 

This recent approval of the Naira for receiving international remittances has become a significant move in the financial landscape of Nigeria. But what does it all mean? Let's break it down step by step.
 

The Prospects of the CBN’s Reapproval of Foreign Remittances in Naira

The Central Bank's decision comes as a response to the mounting calls from various sectors highlighting the significance of foreign remittances in supporting families and the overall economy. The resurgence of foreign remittances in NAIRA is expected to:

 

Bolster the Nation's Foreign Reserves

With the reintroduction of remittances in NAIRA, Nigeria anticipates an upswing in its foreign reserves, further stabilising its economic outlook and bolstering the currency's strength on a global stage.

 

Enhance Accessibility and Convenience

Nigerians residing abroad will find it far more convenient to send money home, ensuring that their loved ones receive funds without unnecessary currency conversions or associated fees.

 

Promote Business Growth

The business community, particularly small and medium-sized enterprises, stands to benefit immensely from the streamlined flow of funds. This move will likely attract foreign investors, reinforcing Nigeria's position as a leading investment destination in Africa.
 

A Brief Overview of Nigerian Expatriates and Their Contribution to the Nigerian Economy

With over 17 million overseas workers and expatriates, Nigeria stands as 4th largest diaspora population in Africa. Most of these overseas Nigerians send money to Nigeria to ensure better financial support to their families, which simultaneously aids the country’s overall economic growth. Nigeria received $20.13 billion in remittances in FY22, which makes up 4.42% of its GDP, indicating the critical value of foreign remittances for the country. Nigerian remittance recipients used to face challenges when receiving money from abroad in terms of conversion of remittances from USD to Naira. Now that The Central Bank of Nigeria has approved remittances to be received in NAIRA, the official currency of Nigeria, recipients can get money directly without involving any hassles of currency conversion. 
 

The Background of the Nigerian Financial System

 

Currency Control in Nigeria by the CBN

In Nigeria, currency control has been a critical aspect of monetary policy. The Central Bank of Nigeria (CBN) regulates foreign exchange rates and oversees the management of the nation's foreign reserves. These regulations are vital in maintaining the stability of the Naira.

 

International Remittances - A Much-Needed Support in Nigeria

International remittances, or the process of sending money across borders, play a vital role in Nigeria's economy. The diaspora's financial contribution significantly impacts families back home, supporting education, healthcare, and other vital needs.
 

The Impact of CBN's Approval of Naira on Nigerian Expatriates and Financial Institutions

What does the approval mean for fintech providers, overseas Nigerians, and their remittance beneficiaries back home?
 

With the new policy, individuals can now receive remittances in Naira directly. It's like having the world's currencies at your fingertips, turning complex transactions into simple ones. Now, every Nigerian expatriate can benefit most from converting an international currency to the local Nigerian Naira. Isn't it convenient and economically beneficial?
 

Financial institutions are also adapting to the change. Banks and money transfer operators are expanding their offerings, aligning with the new regulation. They are inclined towards ensuring economical, convenient, and regulated remittance solutions for worldwide Nigerian expatriates. Most registered MTOs and digital remittance solutions now offer several benefits on online money transfers to Nigeria in an effort to boost remittance inflows through regulated channels.
 

Impact of CBN’s Move on the Nigerian Economy

 

Positive Implications

The CBN's move is more than just a policy change; it's a beacon of economic growth, encouraging foreign investment and fostering financial inclusion. Having the facility to let their beneficiaries receive money directly in their local currency, Nigerian overseas workers will be encouraged to send more funds back home from abroad. Growth in remittance inflows will directly and positively impact Nigeria’s economic progress by stimulating its GDP.
 

Potential Challenges

However, like any bold move, CBN’s move comes with challenges, such as potential fluctuations in exchange rates. But with strategic planning and robust regulatory oversight, these challenges can be navigated.
 

Regulated MTOs (Money Transfer Operators) can help Nigerian diasporas overcome such challenges by offering competitive exchange rates, low transfer fees, no hidden charges, and secure services.
 

The Way Forward

The CBN's commitment to reviving the economy through adaptable policies has always been at the forefront of its initiatives. This decision to permit foreign remittances in NAIRA is another testament to the bank's unwavering dedication to ensuring a robust and resilient Nigerian economic environment.
 

CBN's approval of Naira for receiving remittances has revolutionised the way people receive money in Nigeria. The policy reflects a broader vision of financial empowerment, bringing convenience to individuals and bolstering economic growth. 
 

In conclusion, the Central Bank of Nigeria's decision to greenlight foreign remittances in NAIRA is more than just a financial directive. It's a symbol of the nation's relentless spirit, adaptability, and commitment to securing a prosperous future for all its citizens. As the world keeps evolving, Nigeria is poised to embrace change, harness opportunities, and scale new economic heights. Further, it’s anticipated whether they send money to Nigeria online or through typical banking methods, every Nigerian expat from abroad can aid the country’s economic growth substantially by using regulated channels of remittance.
 

FAQs

What is the CBN's new policy about?

The policy allows the receiving of international remittances in Naira, simplifying the process for individuals. Nigerian expats were restricted to sending remittances only in USD, but now with the CBN’s current move, remittances can be sent directly in Naira, the official currency of Nigeria.
 

How can I send money to Nigeria?

You can send money to Nigeria using various methods, such as through banks, MTOs, and through digital remittance platforms like ACE's mobile app, by following a simple process. You just have to create your account or log in if you have an existing account, select Nigeria as the recipient country, enter your beneficiary’s information and transfer the desired amount.
 

Is it safe to use ACE Money Transfer?

Yes, ACE Money Transfer ensures secure transactions through advanced security measures. The company is an FCA-regulated Authorised Payment Institution (API) that complies with all the security regulations and compliance policies implemented to protect users’ information.
 

What are the benefits of the CBN's new policy for the common people?

The policy makes international transactions easier, more transparent, and accessible to everyone. Further, the beneficiaries will receive more money with great convenience without getting worried about converting remittances from USD to Naira.
 

Is it true that I can send money to Nigeria in Naira?

Yes! The Central Bank of Nigeria has reapproved receiving remittances in Naira, which is the official currency of Nigeria. Now the remittance recipient doesn’t have to worry about converting funds from USD to Naira after receiving remittances sent from abroad.


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