CBN explains reasons for introducing cash for dollar scheme

THE Central Bank of Nigeria has explained the reasons behind the introduction of the ‘Naira4Dollar scheme’, which favours Nigerians in the diaspora seeking to send money home.

The Apex bank laid out the reasons through some posts on its official Twitter handle on Friday, March 6. They are as follows:

1. Consistent with the global trend, Nigeria aspires to ensure that remittance flows and diaspora investments become a significant source of external financing.

2. In an effort to reduce the cost burden of remitting funds to Nigeria by working Nigerians in the Diaspora, the #CBN has introduced a rebate of N5 for every $1 of fund remitted to Nigeria, through IMTOs licensed by the CBN. The Scheme will take effect on the 8th of March 2021.

3. We believe this new measure will help to make the process of sending remittances through formal bank channels cheaper and more convenient for Nigerians in the diaspora. #Emefiele

4. New FX policy will create an easier, more flexible, and more transparent, system of remittance administration, it will greatly enhance the benefits of diaspora remittances in supporting investments and growth in Nigeria. #Emefiele

5. Policy on the administration of remittance flows is aimed at increasing the transparency of remittance inflows, reducing rent-seeking activities, and providing Nigerians in the diaspora with cheaper and more convenient ways of sending remittances to Nigeria. #Emefiele.

6. PwC forecasts suggest that Nigeria’s remittance flows could reach US$34.89 billion by 2023. But this can only be accomplished if remittance infrastructure improves and if the right policies are put in place.

7. The use of reimbursements of remittance fees has been critical in supporting improved inflow of remittances to countries in South Asia and in improving their balance of payments position following the COVID-19 pandemic.

It can be recalled that the Naira4Dollar scheme was last week introduced by the CBN, and would become effective on Monday, March 8, 2021.

The incentive, tagged “Naira 4 Dollar Scheme”, was announced in a circular signed by Saleh Jibrin, CBN‘s Director, Trade and Exchange Department.

The scheme was developed in a bid to increase inflow of the greenback into the Nigerian economy amidst foreign exchange scarcity.

The Central Bank of Nigeria (CBN) had said it will give N5 per dollar receives from diaspora remittance receives via its licensed International Money Transfer Operators (IMTOs).