• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Markets Currencies

Fifteen months after its introduction, Naira4dollar promo fails to save Naira

Ubah Jeremiah Ifeanyi by Ubah Jeremiah Ifeanyi
July 5, 2022
in Currencies
Godwin Emefiele, DSS, CBN

Image Credit: The Guardian Nigeria

Share on FacebookShare on TwitterShare on Linkedin

Since the introduction of the Central bank of Nigeria’s (CBN) “Naira4Dollar Scheme” in March 2021, the Naira rate has fallen by a whopping N127 (or 26%)

Specifically, the parallel market rate of N612/$1 as of Monday, 4th of July, 2022, compares to N485/$1 prior to the launch of the “Naira4Dollar Scheme”.

  • This reflects a N127 reduction or 26% depreciation to the value of the Naira on the parallel market since the scheme was implemented.

Naira4Dollar: The CBN launched the “Naira 4 Dollar Scheme” on March 8, 2021, to incentivize the inflow of remittances from the diaspora into the country, in response to the inadequate forex supply and ongoing pressure on the country’s exchange rate.

RelatedStories

FCT High Court, Benjamin Joseph, zinox

Appeal Court reverses N579bn Stamp Duty payment to Kasmal Services in CBN’s favor 

July 16, 2025
Naira , dollar, exchange rate

Naira depreciates to N1,555/$1 ahead of 301st MPC meeting 

July 16, 2025

The key requirement for this Naira4Dollar program to function was that remittances from the diaspora had to be sent via an authorized international money transfer operator (IMTO).

  • Thus, if you received a diaspora remittance of $20,000 (Twenty Thousand Dollars) CBN would simply credit your Naira account with an additional N100,000 (N5 x 20,000).
  • Originally set to end in May 2021, this Naira4Dollar initiative was extended indefinitely.

Just in case anyone was interested in how this initiative was faring, the CBN released an update in February 2022, stating that diaspora remittances surged to $100 million weekly from $6 million (i.e. a 1,667% surge).

Why does this matter?

From the Central Bank of Nigeria’s perspective, the Naira4Dollar initiative has successfully provided an opportunity to encourage alternative FX inflows from non-oil sources.

However, from the perspective of an average Nigerian, it may be unclear how to acknowledge that this initiative has been successful. This is because the challenges of accessing foreign exchange persist.

Specifically, anecdotal data suggests that businesses continue to experience latency in getting backlogs of FX orders fulfilled. These anecdotal experiences can arguably be evidenced by notifications from key operators such as

  • In February 2022, Nigerian Banks sent out a plethora of communication advising customers of reduced dollar limits on debit cards
  • In May 2022, IATA published information suggesting that Nigeria was owing airline operators a backlog of over $450 million.

So why is the scheme failing?

When the Naira4Dollar scheme was introduced in March 2021 (i.e. fifteen months ago), the CBN had suggested that a huge portion of the diaspora remittances would be incentivized to use the Naira4Dollar initiative rather than going through non-official channels.

  • In other words, the target was to centralize the diaspora remittances of over $20 billion annually. Thus, centralized FX inflows would in-turn, favourably impact the value of the Naira and slow down its depreciation.

One can argue that in the early days of the Naira4Dollar initiative, some stability in the exchange rate was observed (see below chart).

  • Specifically, between March-2021 and May 2021, the spread between the official exchange rate versus the parallel market rates oscillated in a narrow range below N75.
  • However, since September 2021, the difference between the official rates and the parallel rates has simply exploded
  • For 2022, the parallel market premium continues to rise

This widening spread between official and parallel market rates can potentially be attributed to several factors.

  • However, a key theme of these factors is they all simply drive an incremental uptick in demand for the greenback compared to available fx supply.

From a demand uptick perspective a few notable changes occurred;

Firstly, observers of economic activity will recall that Nigeria eased a significant portion of its restrictions in the second quarter of 2021, as vaccines began to arrive in the country. Consequently, by the third quarter of 2021, demand for domestic and international travel had begun to rebound.

The impact of increased economic activity simply meant that by the third quarter of 2021, business demand for FX had simply bounced back, thus the relative stability in parallel market spread achieved by the Naira4Dollar scheme earlier in the year was simply not sustainable.

  • Note that as Nairametrics had previously outlined, a significant driver of FX consumption is for service. This is in addition to business demand for FX to facilitate business imports

Secondly, in the first quarter of 2022, the Russia-Ukraine war commenced causing higher energy prices. This event and the consequent impact on energy and wheat prices added more pressure on our import bill.

  • As Nairametrics has previously outlined, energy and wheat imports remain stubbornly in the list of top ten commodities imported

Consequently, it is not a surprise that as business demands for imports rebounded and FX demand got routed to the less bureaucratic parallel market, whatever incentive Naira4Dollar offered to diaspora remittance simply paled in comparison to the margins available in the black market.

Thus, as with basic economics principles, mismatches between demand and supply will always be reflected in price increases.

  • In this case, the more demand gets routed away from the official window for whatever reason, backlogs, bureaucratic processes, price control etc, the more the FX rates in the parallel market will continue to widen to offset supply imbalance

So, does this mean that the Naira4Dollar initiative has failed completely?

The reality is that observers must acknowledge that the Naira4Dollar scheme is an attempt at establishing an FX marketplace in Nigeria, albeit under the supervision of a dominant participant the CBN.

  • In fact, the CBN has doubled down on this approach to creating an FX marketplace that is has launched a similar scheme for the IEFX window to incentivize eligible corporates with N65/$1 remitted

However, at this stage, it doesn’t appear that the volumes being generated by this initiative are sufficient to match demand upticks.

Furthermore, inefficiencies such as business concerns about bureaucratic processes and price control may need to be addressed transparently.

One interesting thing to note is that the price control concerns at the IEFX window may have begun to abate in recent weeks.

  • Specifically, the NAFEX rate closed at N425/$1 on Friday, 1st of July 2022 compared to the first-quarter average of N416/$1 (I.e. a 2% depreciation at the official window compared to the first quartet).

More actions by the CBN will be welcomed to further incentivize supply. Especially as the apex bank seeks to reduce the premium between its official rates and the parallel market.


Follow us for Breaking News and Market Intelligence.
Tags: Central Bank of NigeriaFeaturedNaira4dollar
Ubah Jeremiah Ifeanyi

Ubah Jeremiah Ifeanyi

For further inquiries about this article, contact: Email: Ifeanyi.ubah@nairametrics.com Twitter: @ubahjc Linkedln: Jeremiah Ubah

Related Posts

FCT High Court, Benjamin Joseph, zinox
Breaking News

Appeal Court reverses N579bn Stamp Duty payment to Kasmal Services in CBN’s favor 

July 16, 2025
Naira , dollar, exchange rate
Currencies

Naira depreciates to N1,555/$1 ahead of 301st MPC meeting 

July 16, 2025
Currencies

Analysts predict naira won’t drop beyond N1,600 in H2 2025, cite reasons 

July 16, 2025
Naira , dollar, exchange rate
Currencies

Naira strengthens to N1,550/$ in parallel market; here’s why it’s gaining 

July 12, 2025
CBN, forex
Financial Services

Financial fraud in Nigeria surges by 45%, 70% of losses linked to digital platforms – CBN 

July 10, 2025
CBN, forex
Financial Services

CBN deadline: Nigerian banks race to file capital restoration plans by July 14

July 8, 2025
Next Post
Nigerian electric car manufacturer raises $9 million despite protest against electric car in Nigeria

Will Nigeria ever be ready to move from fossil fuel cars to electric cars?

Comments 4

  1. Bukhari says:
    July 5, 2022 at 10:02 am

    Let cbn completely ban black market and what will happen. The banks and the govt official who transac at back of fx market now have only an option and this will avail the dollar which will now lead the price drop.

    Reply
    • LolaQue says:
      July 7, 2022 at 5:38 am

      If they do, it will just be like crypto case. Nothing will change. People will keep transacting. The only difference is that, it will be underground. That’s all.

      Reply
      • Mabemma says:
        July 9, 2022 at 10:36 am

        What happened to crytocurrency

        Reply
  2. Oluseyi Boroffice says:
    July 6, 2022 at 3:57 pm

    Probably the worst CBN governor Nigeria has ever had.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank








DUNS

Recent News

  • Tinubu tops online with 4.5 million followers, but most Ministers lack visibility – Report 
  • How Nigerian billionaires fared under Buhari’s 8-year rule 
  • Fresh Thinking, Fresh Spaces: Godrej reimagines Air Care with AER Power Pocket 

Follow us on social media:

Recent News

Under Tinubu, a blueprint for Nigeria’s consumer credit economy is quietly unfolding 

Tinubu tops online with 4.5 million followers, but most Ministers lack visibility – Report 

July 17, 2025
Buhari’s administration created 10 new passport offices-NIS

How Nigerian billionaires fared under Buhari’s 8-year rule 

July 17, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics