The Central Bank of Nigeria has revoked the licenses of all money transfer companies, except three, citing “the greater economic good of Nigeria,” as its reason for embarking on such an action. It further warned that the institution would “not condone any attempt aimed at undermining the country’s foreign exchange regime.” The 3 companies allowed to operate are Western Union, MoneyGram and Ria.
It may be recalled that NairaMetrics brought to your attention that the CBN had lifted its earlier ban on foreign currency deposits, thereby allowing currency transfers. However, this unexpected decision has resulted in immediate criticism due to the immense amount of cash involved.
In 2015 alone, about $20.8 billion was remitted to Nigeria from foreign countries. Furthermore, owners of companies affected by the decision have labelled it as “arbitrary, inexplicable and hugely detrimental to the Nigerian diaspora, who rely on hundreds of money transfer companies and banks, providing them with choice, convenience and competitive pricing.”
The portion of transfers controlled by the still-free-to-operate companies had hitherto been gradually reducing due to the competitive prices provided by these banned money transfer agencies.
Another baffling concern about the sudden decision is the fact that no cogent excuses were given. Rather, the CBN used the vague “greater economic good of Nigeria”. No claims as to how these banned companies were actually detrimental to the economy of the country were made.
The tendency is high that the decision will not seat well with most Nigerians in diaspora, as the most likely result is an oligopoly, where these 3 companies may shoot up the prices for their services, with the full knowledge that there are no other competitors. The charges of MoneyGram for transferring funds to Nigeria was detailed in an earlier post.