Connect with us
Switch
Advertisement
Polaris bank
Advertisement
Esetech
Advertisement
Payfarmer
Advertisement
Patricia
Advertisement
IZIKJON
Advertisement
Fidelity ads
Advertisement
Stallion ads
Advertisement
app

Currencies

CBN expects $24bn annual diaspora remittances – Emefiele

The CBN has stated that it is expecting an estimated $24 billion annually from diaspora remittances.

Published

on

diaspora remittances, Total credit to the economy rose to N19.54trillion – CBN Governor, CRR debits, P-AADS, #EndSARS: CBN says funds in frozen accounts may be linked to terrorist activities, Covid-19: Court closures impacted revenue generation for courts - Emefiele, P&ID dispute: UK Court orders $200 million guarantee to FG, Leaked letter by Poultry Farmers Association triggered CBN emergency approval to import maize, nImplications of CBN's latest devaluation and FX unification, current account deficit, IMF, COVID-19, CBN OMO ban could give stocks a much-needed boost , CBN’s N132.56 billion T-bills auction records oversubscription by 327% , Nigeria pays $1.09 billion to service external debt in 9 months , Implications of the new CBN stance on treasury bill sale to individuals, Digital technology and blockchain altering conventional banking models - Emefiele  , Increasing food prices might erase chances of CBN cutting interest rate   , Customer complaint against excess/unauthorized charges hits 1, 612 - CBN , CBN moves to reduce cassava derivatives import worth $600 million  , Invest in infrastructural development - CBN Governor admonishes investors , Credit to government declines, as Credit to private sector hits N25.8 trillion, CBN sets N10 billion minimum capital for Mortgage firms, CBN sets N10 billion minimum capital for Mortgage firms , Why you should be worried about the latest drop in external reserves, CBN, Alert: CBN issues N847.4 billion treasury bills for Q1 2020 , PMI: Nigeria’s manufacturing sector gains momentum in November, CBN warns high foreign credits could collapse Nigeria’s economy, predicts high poverty, MPC Member, BVN, Fitch, Foreign excchange (Forex), Overnight rates crash after CBN’s N1.4 trillion deduction, Nigeria’s foreign reserves hit $36.57 billion; Emefiele keeps his word on defending the naira, CBN to support maize farmers, projects 12.5 million metric tons in 18 months, BREAKING: CBN Upscales Greenwich Trust Limited, grants it's operational license for merchant banking, AGSMEIS: CBN expand beneficiaries to 14,638., CBN expands access to mortgage financing

A total of $24 billion is expected annually as remittances from citizens in diaspora, following the introduction of Diaspora Foreign Exchange Remittances Policy by the Central Bank of Nigeria.

According to the CBN Boss, Mr. Godwin Emefiele, the target is predicated on the inflows accruable to countries that have similar demographic features with Nigeria, such as Pakistan, which often receives about $2bn monthly from their citizens in diaspora.

READ: CBN clears air on Diaspora Remittances, official inflows $2.6bn not $26bn 

In his words, “I’m aware from the data available that, for instance, Pakistan, even in the midst of COVID-19 receives $2bn monthly from inflows from Pakistanis in diaspora.

“If Nigeria is able to receive even if it is just $1bn monthly or moving close to $2bn monthly, I’m so certain you all know what will happen to the exchange rate in Nigeria.”

Specta

The CBN Boss is so optimistic that consistently meeting the monthly target of $2bn would reduce so much pressure on the Deposit Money Banks from calling the CBN to fund their commercial operations.

READ MORE: Nigeria records lowest remittances from abroad since 2008

READ: World Bank says remittances to Nigeria, other LMICs will drop by 20% in 2020

What you should know

  • Diaspora Foreign Exchange Remittances Policy takes effect from today, December 4, 2020.
  • To block any possible loophole or sabotage, the CBN had ordered all DMBs to close all their Naira General Ledger, through which the naira remittances were being carried out.
  • The target of annual remittance inflow of close to $24bn will help improve the country’s balance of payment position, reduce her dependence on external borrowing, and mitigate the impact of COVID-19 on foreign exchange inflows into the country.

READ: CBN issues subtle warning explaining how domiciliary accounts should be used

  • The policy change would help finance a future stream of investment opportunities for Nigerians in the Diaspora, while also guaranteeing that recipients of remittances would receive a market-reflective exchange rate for their inflows.
  • All beneficiaries shall have unfettered access and utilization to such foreign currency proceeds, either in FX cash and/or in their Domiciliary Accounts, in line with the extant CBN circular TED/FEM/FPC/ GEN/01/010.

READ: Nigeria is the 14th largest producer of tomatoes in the world, second in Africa – NIHORT

READ: Financial Expert explains why CBN should be worried over Facebook’s Libra

Coronation ads

Johnson is a risk management professional and banker with unbridled passion for research and writing. He graduated top of the class with B.sc Statistics from the University of Nigeria and an MBA degree with specialization in Finance from Ambrose Alli University Ekpoma, with fellowships from the Association of Enterprise Risk management Professionals(FERP) and Institute of Credit and Collections management of Nigeria (FICCM). He is currently pursuing his PhD in Risk management in one of the top-rated universities in the UK.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Currencies

Naira falls across forex markets as CBN moves against IMTOs

The exchange rate at the black market where forex traded unofficially depreciated at N477/$1.

Published

on

Naira falls across forex markets as businesses resume after public holidays

On January 22, 2021, the exchange rate between the naira and the dollar depreciated closing at N394.17/$1 at the NAFEX (I&E Window) where forex is traded officially.

Forex turnover, however, dropped by about 42.2% as pressure on the foreign exchange market continues.

The Central Bank of Nigeria (CBN) in a new circular, read the riot act to the International Money Transfer Operators (IMTOs) as they have threatened to sanction some of them who still facilitate diaspora remittances in naira, contrary to its earlier directive that it must be in foreign currency.

READ: Nigeria faces prolonged exchange rate crisis as oil prices remain stuck at $40

Also, the exchange rate at the black market where forex traded unofficially depreciated at N477/$1. The exchange rate at the parallel market closed at N475/$1 on the previous trading day of January 21, 2021, representing a N2 drop.

Specta

The exchange rate disparity between the parallel market and the official market is about N82.83, representing a 17.36% devaluation differential.

READ: CBN to prevent exporters with unrepatriated export proceeds from banking services

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Friday, closing at N394.17/$1. This represents a 17 kobo drop when compared to the N394/$1 that it closed on the previous trading day.

  • The opening indicative rate was N393.15 to a dollar on Friday, this represents a N1.01 gain when compared with the N394.16 to a dollar that was recorded on Thursday, January 21, 2021.
  • The N395 to a dollar was the highest rate during intra-day trading before it closed at N394.17 to a dollar. It also sold for as low as N390/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window dropped by 42.2% on Friday, January 22, 2021.
  • According to the data tracked by Nairametrics from FMDQ, forex turnover declined from $77.04 million on Thursday, January 21, 2021, to $44.51 million on Friday, January 22, 2021.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.
  • There are fears that the exchange rate at the black market might be under pressure in the coming weeks as importers scramble for dollars to meet their demands.

READ: A summer of higher food prices, limited room for monetary policy

Oil price steady rise

Brent crude oil price is at about $55.34 per barrel as of Monday morning, as it moves towards the $60 mark, a strong sign that global demand could sustain price increases in 2021.

  • This appears as a boost to Nigeria as the country’s crude oil price benchmark for 2020 was $40 while it projected an oil production output of 1.8 million barrels per day.
  • Nigeria has a production capacity of 2.5 million barrels per day but is subject to OPEC’s crude oil production cuts, which are expected to help sustain higher oil prices.
  • The higher oil prices and steady production output have positively impacted Nigeria’s external reserves, rising sharply to $36.304 million according to central bank data dated January 14, 2020.
  • This is the highest level since July 2020 and a sign that higher oil prices and steady output levels may be contributing significantly to Nigeria’s foreign exchange position.

READ: A Joe Biden presidency and its impact on Nigeria’s oil

Nigeria rising external reserves

  • The external reserve has risen to $36.508 billion as of January 21, 2021.
  • Nairametrics had earlier reported that the government may have taken receipt of the $1-1.5 billion World Bank loan.
  • The external reserves have increased by $1.135 billion since December 31, 2020, when it closed the year at $35.3 billion.
  • Nigeria also needs the external reserves to hit $40 billion if it is to adequately meet some of the pent up demand that has piled up since 2020 when oil prices crashed and the pandemic caused major economic lockdowns.

Continue Reading

Currencies

CBN to prevent exporters with unrepatriated export proceeds from banking services

From January 31, 2021, the CBN will bar exporters who fail to repatriate export proceeds from accessing banking services.

Published

on

CBN to restrict foreign exchange on more food imports

The Central Bank of Nigeria (CBN) has announced the prohibition of all Nigerian exporters who are yet to repatriate their export proceeds, from banking services effective from January 31, 2021.

The apex bank has a standing policy that instructs exporters to repatriate exports within 90 days for oil and gas and 180 days for non-oil exports constitute a breach of the extant regulation.

In a letter issued by one of the commercial banks to its exporters, and seen by Nairametrics, it cited the CBN’s new circular stating that it will bar exporters who do not repatriate from accessing banking services.

See excerpt of the CBN circular barring exporters from accessing banking services.

“Please be informed that the Central Bank of Nigeria (CBN) through its circular referenced TED/EXP/CON?NEX/01/001 dated 13th January 2021 has instructed that all exporters with unrepatriated export proceeds before 31st January 2021 should be barred from accessing all banking services.”

Specta

In lieu of this, all concerned exporters are urged to comply with the directive before the specified date.

Why this circular?

Analysts believe that the directive is part of a monetary control mechanism by policymakers to maintain relative stability in the exchange rate, especially after the pandemic created a wide disparity between the official exchange and the parallel market rates, eliminating incidences of over-invoicing, transfer pricing, double handling charges, etc.

  • By repatriating export proceeds via the NAFEX (Investor and Exporter window) the central bank believes this will improve liquidity in the official market and perhaps strengthen the naira at the black market where wired transfers often cost a premium of N5-N10 over the street exchange rate of N475/$1.
  • Most export proceeds find their way to the parallel market where exporters can exchange for higher naira value-boosting their gains on foreign currency conversions.
  • It is to be seen if exporters will comply with this directive or seek other means of avoiding the hammer of the exporters. Most exporters already find a way to avoid these hammers by opening foreign bank accounts where most of the export proceeds are warehoused and then sold at the black market.
  • Some rely on complex intercompany transactions to avoid repatriating the forex through the NAFEX window

What you should know

  • According to Bloomberg sources, the new directive applies to exports up until June last year.
  • In a bid to ensure prudent use of foreign exchange resources, the Central Bank of Nigeria had earlier instructed authorised dealers and exporters to only open forms M for letters of credit, bills for collection, and other forms of payment

Continue Reading

Currencies

CBN issues modalities for payout of diaspora remittances in dollars

The new circular explains who diaspora remittances are to be paid to beneficiaries in Nigeria only in foreign currency and not naira.

Published

on

diaspora remittances, Total credit to the economy rose to N19.54trillion – CBN Governor, CRR debits, P-AADS, #EndSARS: CBN says funds in frozen accounts may be linked to terrorist activities, Covid-19: Court closures impacted revenue generation for courts - Emefiele, P&ID dispute: UK Court orders $200 million guarantee to FG, Leaked letter by Poultry Farmers Association triggered CBN emergency approval to import maize, nImplications of CBN's latest devaluation and FX unification, current account deficit, IMF, COVID-19, CBN OMO ban could give stocks a much-needed boost , CBN’s N132.56 billion T-bills auction records oversubscription by 327% , Nigeria pays $1.09 billion to service external debt in 9 months , Implications of the new CBN stance on treasury bill sale to individuals, Digital technology and blockchain altering conventional banking models - Emefiele  , Increasing food prices might erase chances of CBN cutting interest rate   , Customer complaint against excess/unauthorized charges hits 1, 612 - CBN , CBN moves to reduce cassava derivatives import worth $600 million  , Invest in infrastructural development - CBN Governor admonishes investors , Credit to government declines, as Credit to private sector hits N25.8 trillion, CBN sets N10 billion minimum capital for Mortgage firms, CBN sets N10 billion minimum capital for Mortgage firms , Why you should be worried about the latest drop in external reserves, CBN, Alert: CBN issues N847.4 billion treasury bills for Q1 2020 , PMI: Nigeria’s manufacturing sector gains momentum in November, CBN warns high foreign credits could collapse Nigeria’s economy, predicts high poverty, MPC Member, BVN, Fitch, Foreign excchange (Forex), Overnight rates crash after CBN’s N1.4 trillion deduction, Nigeria’s foreign reserves hit $36.57 billion; Emefiele keeps his word on defending the naira, CBN to support maize farmers, projects 12.5 million metric tons in 18 months, BREAKING: CBN Upscales Greenwich Trust Limited, grants it's operational license for merchant banking, AGSMEIS: CBN expand beneficiaries to 14,638., CBN expands access to mortgage financing

The Central Bank of Nigeria (CBN) has issued a circular setting out the Modalities for Payout of Diaspora Remittances.

The apex bank has frowned at activities of some International Money Transfer Operators (IMTOs) and unlicensed companies who continue to facilitate diaspora remittances into the country in Naira instead of dollars.

The apex bank’s reaction follows the contravention of its earlier directive that all diaspora remittances must be paid to the beneficiaries in dollars.

This disclosure was contained in a circular titled, ‘Modalities for Payout of Diaspora Remittances’, issued by the CBN on Friday, January 22, 2021, and signed by its Director Trade and Exchange Department, Dr O.S. Nnaji.

READ: CBN revokes licenses of 7 Payment Service Providers

Specta

What the CBN is saying

The CBN in its circular said, ‘’Further to our circular titled ‘Receipt of Diaspora Remittances: Additional Operational Guidelines’, it has come to our notice that some IMTOs and unlicensed companies continue to facilitate diaspora remittances into the country in Naira, “in clear contravention of the Central Bank of Nigeria directive that all remittances be paid to beneficiaries in dollars.’’

READ: More pressure on the naira as Diaspora remittances to drop by 20%

For the avoidance of doubt, the Central Bank of Nigeria further clarifies as follows;

  1. Only licensed IMTOs are permitted to carry on the business of facilitating diaspora remittances into Nigeria;
  2. All diaspora remittances must be received by beneficiaries in foreign currency only (cash and /or transfers to domiciliary accounts or recipients);
  3. IMTOs are not permitted, under any circumstances, to disburse diaspora remittances in Naira (either in cash or by electronic transfers), be it through remittance settlement accounts (which had been earlier directed to be closed), third party accounts or via any other payment platforms within and/or around the Nigerian financial system.’’

READ: Nigeria’s forex devaluation timeline – 2020

The apex bank in the circular said that the measures were intended to promote transparency, grow diaspora remittances and significantly improve foreign exchange inflows into Nigeria.

The CBN warned that strict sanctions, including withdrawal of operating licenses, shall be imposed on any individuals and/or institutions found to be aiding, abetting or directly contravening these guidelines.

It went further to say that it shall not hesitate to authorize the closure of the accounts of unlicensed operators in Nigerian banks, including being barred from accessing banking services in Nigeria.

It promised continued monitoring of developments in this regard, adding that it would also issue further guidance as appropriate.

Coronation ads

READ: Continuous increase in inflation rate may weaken economy – CBN report

Polaris bank

What this means

With the insistence of the apex bank on its earlier directive, it means that Nigerians living in the diaspora can transfer foreign currency to their relatives and loved ones in the country, who in turn will withdraw the money in dollar cash and sell it anywhere they so desire in exchange for naira.

It means they can for instance receive foreign transfers such as Western Union or Moneygram, withdraw it in dollars and then sell at the black market rate or anywhere else they want to. This they believe will help to stabilize the exchange rate and discourage hoarding.

Jaiz bank ads

READ: UBS warns Bitcoins could disappear like Myspace

What you should know

  • It can be recalled that the CBN, had in November 2020, amended the procedure for the receipt of diaspora remittances and insisted that it must be paid in dollars to the beneficiaries, in an apparent and frantic attempt to improve liquidity in the forex market and reduce the disparity between the black market and the official window.
  • Also in an additional guideline for diaspora remittances, the CBN barred IMTOs from sending money to Mobile Money Operators and also stopped the integration of payment services providers to IMTO accounts. It also stopped switches and processors from getting involved in foreign remittances.

Continue Reading
Advertisement




Advertisement