Excitement as New Diaspora Remittances Policy takes Effect Today
There is palpable excitement among Forex users as the Central Bank of Nigeria’s (CBN) new policy that allows unhindered access to Diaspora remittances takes effect today.
The CBN Governor, Mr. Godwin Emefiele, spoke yesterday at a press conference in Abuja and said the policy released last Monday would take effect today.
He said following the announcement of the new policy measures, the apex bank, in an effort to enable smooth implementation had engaged with the commercial banks and the International Money Transfer Operators (IMTOs) to ensure that recipients of remittance inflows are able to receive their funds in the designated foreign currency of their choice.
He stated that as a result of the CBN’s engagements with major IMTOs and the DMBs yesterday, the stakeholders had committed that they would deploy all the necessary tools to “ensure that these measures become effective from Friday, December 4, 2020.”
Emefiele told journalists in Abuja that the new policy would help in providing a more convenient channel for Nigerians in the Diaspora to remit funds to the country as well as ensure that the funds can contribute to the development of the economy.
He said: “I, therefore, seize this opportunity to announce to Nigerians both at home and in the Diaspora that the policy of recipients receiving their monies from abroad kicks off on December 4, 2020.
“All the IT systems of these IMTOs (Western Union, MoneyGram and Ria Services) and the DMBs have been properly configured to begin remittance tomorrow, Friday, December 4, 2020.”
According to him, the apex bank’s policy to allow for unfettered access to foreign exchange from the Diaspora and other money transfer remittances is to support improved remittance inflows into the country through official channels.
Emefiele said the current annual remittance inflow of about $24 billion could help in improving the balance of payment position, reduce dependence on external borrowing and mitigate the impact of COVID-19 on forex inflows into the country.
He, however, said following up on the implementation of the new forex and Diaspora remittance policies, the CBN observed some pushback by some of the IMTOs, which he said were bent on continuing their nefarious activities of undermining the new policy by attempting to resist it.
He said: “This was the reason the CBN had to insist on Wednesday, December 2, 2020, that all DMBs must close all naira general ledgers through which the naira remittances were hitherto being carried out.
“Based on this premise, we analysed data on IMTO inflows into the country over the past year, and through our investigations, discovered that some IMTOs, rather than compete on improving transaction volumes and create more efficient ways for Nigerians in the Diaspora to remit funds, resorted to engaging in arbitrage arrangements on the naira-dollar exchange rate, which to a large extent resulted in a significant drop in inflows into the country.
“It also encouraged the use of unsafe unofficial channels, which also supported diversion of remittance flows meant for Nigeria, thereby undermining our foreign exchange management framework.”
Emefiele explained that in an effort to boost remittance inflows and foster an environment that would enable a faster, cheaper and more convenient flow of remittances back to Nigeria, the CBN had on November 30, announced a new policy initiative, which would help to support these objectives.
He added that the new policies will be a major game-changer in remittance inflows into the country.
He said: “As a matter of fact, from the data that we have, the way the size of remittance is computed by the International Monetary Fund (IMF) takes into consideration, not just the money that comes in directly as flows but also what we call the earnings of Nigerians in Diaspora in different parts of the world – because they believe and we believe as well that some portion of these monies actually flow back home to support members of their families.
“But it is important for me to draw a parallel. I am aware from data available that for instance, Pakistan even in the midst of COVID-19 receives $2 billion monthly from Pakistanis in Diaspora. This is a country that I will say by geography, demography is about the same with Nigeria.
“So we are hereby saying that if Nigeria is even able to receive even if it’s just $1 billion monthly or $2 billion monthly, I am so damn certain that you all know what will happen to the exchange rate of Nigeria.”
He said he was certain that after some time, deposit money banks will not have any need to call on the central bank to provide dollar to fund their imports or commercial operations.
Emefiele also dispelled concerns that the new policies could support money laundering, adding that the institutions involved in money transfer have good reputation as well as a robust customer identification system in the country.
He said: “I want you to know that even from abroad, where these funds are coming, that is why we talk about institutions that are tested like Western Union, Ria and MoneyGram, which also in those countries where they are domiciled are properly licensed and regulated and I know for certain that countries, where they are domiciled, would not allow money laundering practices or remittance of funds from those countries into our country to be associated with money laundering.”
He said the CBN would ensure that most of those who would be receiving Diaspora remittances come with some forms of identity card, saying when the transfers started in 1996 with some forms of identification at that time, First Bank was able to ensure that people who were receiving funds were properly identified and could easily be traced talk less of even today where there is BVN.
According to Emefiele, in an effort to liberalise, simplify and improve the receipt and administration of Diaspora remittances into the country, the CBN has moved to ensure that beneficiaries of Diaspora remittances through IMTOs shall henceforth receive such inflows in foreign currency (US dollars) through the designated bank of their choice.
He said such recipients of remittances may have the option of receiving these funds in foreign currency cash (US dollars) or into their ordinary domiciliary account.
He added that the changes were necessary to deepen the foreign exchange market, provide more liquidity and create more transparency in the administration of Diaspora remittances into Nigeria.
He stated that the measures would help finance a future stream of investment opportunities for Nigerians in the Diaspora while also guaranteeing that recipients of remittances will receive a market-reflective exchange rate for their inflows.
CBN, NSIA, AFC to Float N15tn Infrastructure Fund for Nigeria
Meanwhile, as part of the new environment being created for the implementation of public-private partnership (PPP) projects, the federal government through the Central Bank of Nigeria (CBN), Nigerian Sovereign Investment Authority (NSIA) and African Finance Corporation and other financial institutions is to float a N15 trillion infrastructure fund.
The Vice President, Prof Yemi Osinbajo, who disclosed this at a webinar, yesterday on Deepening the Nigerian infrastructure stock through Public-Private Partnership (PPP), said: “As part of the new environment being created for the implementation of PPP projects, the federal government through the CBN, Nigerian Sovereign Investment Authority and African Finance Corporation and other financial institutions will be creating a N15 trillion Infrastructure Fund that will help to, not only unlock investment from local sources but also attract foreign private investment in infrastructure development.”
This, he said, would help to, not only unlock investment from local sources but also attract foreign private investment in infrastructure development.
Speaking at the event, which was organised by the Bureau of Public Enterprises (BLE), Osinbajo, who is the Chairman of the National Council on Privatisation (NCP), noted that adopting investments for infrastructural development in the country is now an imperative as reliance on public expenditure alone is no longer sufficient or capable of meeting the $3 trillion needed to bridge the infrastructure deficit over the next 30 years.
“In spite of government interventions over the years, Nigeria still faces a huge infrastructural deficit, which is constraining rapid economic growth,” he said, adding: “The federal government recognises this fact which is why we are considering other approaches to complement and boost financing for the development and maintenance of infrastructure in Nigeria.”
Osinbajo noted that available statistic from the National Integrated Infrastructure Master Plan (NIIMP) and the Economic Recovery and Growth Plan indicate that Nigeria needs up to $3 trillion over the next 30 years to bridge the infrastructure gap.
Based on the statistics, he stated that the federal government would have to spend the entire revised 2020 appropriation of N10.81 trillion continuously for the next 108 years or more on capital expenditure to meet that target.
He explained that the fact that N2.49 trillion was appropriated for capital expenditure in 2020, underscored the importance of deliberate and pragmatic action to boost infrastructural spending.
On the benefits of effectively implementing PPP arrangement for Nigeria, the vice president explained that “if properly designed and executed, PPP models will unlock innovative infrastructure financing and management in a transparent and more efficient manner. Indeed, using PPP frameworks, Nigeria has the potential to attract and benefit immensely from the huge local and foreign private sector resources.”
On how the Buhari administration is leveraging the partnership with the private sector to bridge the huge infrastructure gap, Osinbajo said the federal government recently issued a circular on the administration of PPP projects in the country to provide the much-needed clarity.
The circular, he said, re-emphasised that the BPE shall be responsible for the concession of public enterprises and infrastructure already listed in the First and Second Schedules of the Public Enterprises Act.
Calling for the cooperation of all stakeholders for the effective implementation of the policy, Osinbajo noted that it was expected that this new policy direction would provide clarity to stakeholders and foster the improvement of PPP programmes in the country.
On the operations of the Infraco Company, Osinbajo said the company will be professionally run by select managers who are chosen by internationally accepted standards.
Calling on the private sector to support Nigeria’s efforts targeted at developing critical infrastructure through partnerships, the vice president urged all stakeholders to always see all sides of the infrastructure challenge in Nigeria stating that “the current deficit in Nigeria’s infrastructure presents both a challenge and an opportunity.
In his welcome address, the BPE Director-General, Mr. Alex Okoh, said it was evident from the cost implications that government alone cannot bridge the infrastructure gap, hence the need for alternative funding avenues through PPP.
Participants at the webinar were, among others, the Ministers of Mines and Steel Development, Mr. Olamilekan Adegbite; Industry, Trade and Investment, Chief Niyi Adebayo; Health, Prof. Osagie Ehanire; the Chairman, Senate Committee on Privatisation, Senator Theodore Orji; and the Director-General of the BPE, Okoh, who delivered the opening remarks.
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