CBN to Pay  Receivers of Diaspora Remittances N5 for Every $1 Received

In a desperate move to encourage diaspora remittances, the Central Bank of Nigeria (CBN) has introduced the ‘CBN Naira 4 Dollar Scheme’ to pay diaspora remittance recipients.

In the apex bank latest circular directed to all Deposit Money Banks, International Money Transfer Operators (IMTOs) and the General Public on Sunday, the central bank said the move was to encourage inflows of diaspora remittances.

It said “In an effort to sustain the encouraging increase in inflows of diaspora remittances into the country, the Central Bank of Nigeria (CBN) hereby announces the introduction of the “CBN Naira 4 Dollar Scheme”, an incentive for senders and recipients of international Money Transfers.

“Accordingly, all recipients of diaspora remittances through CBN licensed IMTOs shall henceforth be paid N5 for every USD1 received as remittance inflow.”

The new CBN Naira 4 Dollar Scheme was introduced after the apex bank failed to attract enough diaspora remittances following the November 2020 declaration that recipients of diaspora remittances can now receive their funds in US Dollars.

However, because of the negative impact of COVID-19 on diaspora Nigerians, remittances to Africa’s largest economy plunged in 2020 and has remained below CBN’s projected $1.8 billion to $2 billion per month. The idea was to flood the economy with about $20 billion yearly diaspora remittance.

Therefore, the central bank was forced to introduce a new initiative gear towards luring diaspora remittances into the economy to complement dwindling foreign reserves caused by the weak crude oil production of 1.4 million barrels per day and the generally weak revenue generation.

The weak fiscal buffer amid persistent dollar scarcity that has plunged the Naira value against global counterparts is forcing the apex bank to take obvious desperate moves to sustain Nigeria’s weak economic recovery.

Nigeria’s economy unexpectedly rebounded from the recession with a 0.11 percent growth rate in the fourth quarter of 2020 despite manufacturing and other key sectors still contracting.

The central bank said “In light of this, the CBN shall, through commercial banks, pay to remittance recipients the incentive of N5 for every USD1 remitted by sender and collected by designated beneficiary. This incentive is to be paid to recipients whether they choose to collect the USD as cash across the counter in a bank or transfer same into their domiciliary account.

“In effect, a typical recipient of diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional N5 per USD received.”

The apex bank added the new initiative will take effect today, March 8, 2021.

“Please note having discussed with banks and IMTOs, the scheme takes effect from Monday 8 March 2021 and ends on Saturday 08 May 2021,” CBN stated.

Download the circular here naira4dollar.