Nigeria recorded $282.61 million as total direct foreign exchange (FX) remittances in the first quarter (Q1) of 2024.
The figure represents a decrease of $18.96 million or 6.28% compared to the $301.57 million diaspora remittances recorded in Q1 2023.
This is according to international payment data from the website of the Central Bank of Nigeria (CBN).
Nigeria’s direct foreign exchange remittance refers to money transfers from other countries to family members or other individuals in the country.
The CBN data covers direct diaspora remittances into Nigeria facilitated through international money transfer operators (IMTOs).
Breakdown of remittance payments
- January 2023 saw remittances totalling approximately $79.19 million. In contrast, January 2024 experienced a substantial increase, with remittances reaching nearly $138.56 million. This represents a growth of approximately 75% year-over-year for the month of January alone.
- February 2023 recorded remittances of about $83.76 million, whereas February 2024 saw a significant decline to just $39.15 million. This sharp decrease of more than 53% in February’s remittances year-over-year suggests a pronounced volatility in remittance inflows during this month.
- March 2023 was a strong month with remittances peaking at $138.63 million. However, March 2024 experienced a decrease, with remittances totalling $104.91 million, which is a drop of approximately 24% compared to the previous year.
The year-over-year data reveals fluctuations that could be influenced by economic factors, policy changes, or other external variables affecting remittance flows during these periods.
CBN grants approval in principle to 14 new IMTOs
The CBN activated plans to double foreign-currency remittance flows through formal channels by granting 14 new (IMTOs) Approval-in-Principle (AIP), according to the Bank’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali on Wednesday.
She said: “We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. We have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry.”
Sidi Ali noted that increasing formal remittance flows will help the historical volatility in Nigeria’s exchange rate caused by external factors, such as fluctuations in foreign investment and oil export proceeds.
What You Should Know
- In January 2024, the CBN issued a circular that removed the previous cap on exchange rates quoted by IMTOs. Prior to the circular, IMTOs were required to quote rates within a permissible range of -2.5% to +2.5% around the previous day’s closing rate of the Nigerian Foreign Exchange Market.
- By the end of January, the apex bank further released revised guidelines for the operations of IMTOs. The apex bank also increased the application fee for an IMTO licence from N500,000 in 2014 to N10 million in the revised guidelines. This is an increase of about 1,900% in about 10 years. The CBN also established a minimum operating capital requirement for International Money Transfer Operators (IMTOs) at $1 million for foreign entities and an equivalent amount for local IMTOs.
- The apex bank also reached an agreement with International Money Transfer Operators (IMTOs)to set up a Collaborative Task Force to double remittance inflows into the country. The task force formed to double remittance inflows into Nigeria reports directly to Yemi Cardoso, the Governor of the CBN.
- At a CBN roundtable held during the World Bank/ International Monetary Fund (IMF) Spring Meetings in Washington DC, experts outlined measures that must be taken by Nigeria to improve foreign exchange remittance flows into Nigeria. One of the measures is to reduce the cost of transactions for the diaspora to encourage them to send more forex to Nigeria.
- Stakeholders also called for Nigeria’s removal from the grey list of the Financial Action Task Force (FATF), with a view to reducing high transaction costs for remittance flows.