The Central Bank of Nigeria (CBN) has reported a 39% increase in inflows through International Money Transfer Operators (IMTOs) for the first quarter of 2024 compared to the same period in 2023.
This is according to data from the quarterly statistical bulletin of the CBN for the first quarter of 2024.
Recent reforms implemented by the CBN aimed at attracting more dollar supply through IMTOs seemed to have triggered the increase.
What the data is saying
- In January 2024, inflows stood at $383.04 million, a significant rise of 30% from $295.21 million in January 2023.
- This upward trend continued in February, with inflows reaching $322.83 million, representing a dramatic 65% increase from $195.23 million in February 2023.
- March 2024 saw inflows of $363.70 million, reflecting a 30% rise from the $279.79 million recorded in March of the previous year.
- The total inflow for the first quarter of 2024 amounted to $1.07 billion, marking a 39% increase from the $770.23 million recorded in the same period of 2023.
- When comparing Q1 2024 to the last quarter of 2023, which saw total inflows of $965.82 million, there is an increase of about 11%.
What you should know
In January 2024, the CBN issued a circular that removed the previous cap on exchange rates quoted by IMTOs.
Before 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 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.
Also, IMTOs were barred from purchasing foreign exchange from the domestic market to fulfil their obligations.
However, with a recent circular, it appears that this ban has been lifted, and IMTOs can now trade on the official market.
The apex bank earlier 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.
Also, the CBN recently granted 14 new Approval-in-Principle (AIP) to IMTOs, according to the Bank’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali.
The Central Bank’s reforms have included streamlining processes, onboarding more IMTOs, and enhancing measures to ensure an increase in the supply of foreign currencies.
These measures have evidently paid off, as evidenced by the substantial increase in remittance inflows.
This surge in remittance inflows is crucial for Nigeria’s economy, providing much-needed foreign exchange and supporting household income.