The Central Bank of Nigeria (CBN) has reported a significant boost in remittance inflows channeled through International Money Transfer Operators (IMTOs) for the first quarter (Q1) of 2024. This positive development comes on the back of recent CBN reforms implemented by the apex bank aimed at attracting more foreign exchange (FX) supply through IMTOs.
CBN Reforms Drive Upward Trend
Data from the CBN’s quarterly statistical bulletin for Q1 2024 reveals a 39% increase in remittance inflows compared to the same period in 2023. This translates to a total inflow of $1.07 billion in Q1 2024, a substantial jump from the $770.23 million recorded in the first quarter of the previous year.
A month-by-month breakdown further highlights the upward trend. In January 2024, inflows stood at $383.04 million, a significant rise of 30% from $295.21 million in January 2023. This positive momentum continued in February with inflows reaching $322.83 million, representing a dramatic 65% increase from $195.23 million in the same month the year before. March 2024 saw inflows of $363.70 million, reflecting a 30% rise from the $279.79 million recorded in March 2023.
Liberalized FX Regime and Streamlined Processes
Analysts attribute this surge in remittance inflows to a combination of factors, primarily the CBN’s recent liberalization of the foreign exchange regime. In June 2023, the apex bank merged all segments of the FX market into the Investors and Exporters (I&E) window and reintroduced the willing buyer, willing seller model. This move aimed to improve transparency and access to foreign exchange for businesses and individuals.
However, the initial liberalization did lead to a significant devaluation of the naira. To address this, the CBN implemented further reforms specifically focused on IMTOs. In January 2024, a circular was issued removing the previous cap on exchange rates quoted by IMTOs. This change provided them with greater flexibility and potentially made their services more attractive to senders.
Furthermore, the CBN established a Collaborative Task Force with IMTOs, aimed at doubling remittance inflows into the country. This task force directly reports to the CBN Governor, Yemi Cardoso, highlighting the bank’s commitment to this initiative. Additionally, the CBN recently granted approval-in-principle (AIP) to 14 new IMTOs, further expanding the options available to Nigerians abroad sending money back home.
Related: CBN Governor Cardoso: Rate Hikes Stabilized Naira, Plans to Double Remittances in a Year
Impact on Economy
The CBN’s reforms appear to be yielding positive results. The substantial increase in remittance inflows in Q1 2024 demonstrates the effectiveness of these measures. This surge in remittances is critical for the Nigerian economy, providing much-needed foreign exchange reserves and bolstering household income. Foreign exchange plays a vital role in facilitating international trade and supporting the stability of the naira. Remittances, in turn, directly contribute to household spending and poverty reduction efforts.
If You Ask Me
The significant increase in remittance inflows through IMTOs is a positive development for the Nigerian economy. This influx of foreign exchange will help to stabilize the naira and bolster the country’s foreign reserves. Additionally, increased remittance inflows will provide much-needed financial support for Nigerian households, contributing to economic growth and development.
While the initial results of the CBN’s reforms are encouraging, it remains to be seen if this upward trend in remittance inflows will be sustained. Continued monitoring and adjustments to the CBN’s policies may be necessary to ensure that remittance inflows remain
