The Central Bank of Nigeria (CBN) says it has implemented new measures to allow eligible international money transfer operators (IMTOs) to access naira liquidity at the official window.
The CBN, in a circular on Monday, said the new policy will boost local currency liquidity and increase diaspora remittances.
The apex bank said: “The bank has implemented measures that will enable eligible International Money Transfer Operators (IMTOs) to access NGN liquidity at the CBN window.
“These measures are aimed at widening access to local currency liquidity for the settlement of diaspora remittances.”
The communiqué stated that “eligible IMTO operators will be able to access the CBN window directly or through their Authorized Dealer Banks (ADBs) to execute transactions for the sale of foreign exchange in the market.”
The IMTOs are companies that provide cross-border money transfer services.
According to the CBN, they facilitate the transfer of funds from individuals or entities residing abroad to recipients in Nigeria, as well as the payment of a corresponding sum to a beneficiary through a clearing network to which the IMTO belongs.
This means the IMTOs were not active players in Nigeria’s FX market — but the latest CBN policy now allows them to do so.
Stipulating rules to guide the process and enable compliance, the CBN said “same day settlement” will be available for transactions executed “before noon on a trading date.”
The bank said pricing on the CBN portal will be reflective of NAFEX-traded rates “observable on an acceptable market benchmark.”
“The operation of this market segment follows the existing arrangement in place for authorized dealers with Foreign Portfolio Investment participating in the primary market securities auctions,” the regulator added.
“Regulatory returns to be submitted to the CBN by all participants on a daily basis are mandatory, and this is expected to contain all the relevant information on the sources of funds.
“Participants in this segment are the IMTOS, Authorized Dealer Banks and CBN. This circular is with immediate effect.”
In February, the CBN had asked the IMTOs to only make naira payments to recipients in Nigeria, removing the allowable limit of the FX rate quoted for such transactions.
The policy, which came at a time of serious volatility, was part of a series of moves by the CBN to encourage transparency, and for operators to have a more competitive FX market, and increase supply into the country.
On April 20, Dr. Olayemi Cardoso, Governor of the CBN, said the financial regulator has been collaborating with the IMTOs to collectively commit to doubling remittance flows through formal channels into Nigeria.
On May 15, the CBN also granted approval in principle (AIP) to 14 new IMTOs.
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