The regulator says it is developing a central portal for all remittance inflows and the Nigerian Interbank Settlement System (NIBSS) will manage it to ensure visibility of remittances.
For now, it is still unclear how things will play out, but more developments are still likely on their way. For those reluctant to tow the CBN’s route, another sector has been thriving in 2020.
The Central Bank of Nigeria (CBN) has suspended Mobile Money Operators, Payment Switch providers from receiving remittances or integrating their systems with International Money Transfer Operators (IMTOs).
As of February 2019, some mobile money operators and payment processing companies like Paga, Interswitch, eTranzact, and Flutterwave already had an approved IMTO licence from the CBN.
According to a statement released by the Central bank, it pushed this directive since a few operators have kept paying remittances in local currency instead of the US dollar.
In light of this, the CBN has ordered all payment switches and processors to stop processing any local currency transfers for remittances through IMTOs. It also instructed MMOs to disable their wallets from receiving remittances from IMTOs immediately.
The CBN also demanded that payment services companies should stop integrating their systems with IMTOs and make sure remittances do not get mixed up with other legitimate transactions.
IMTOs are required to tell any recipient that they can either receive their money in cash (US dollar) or get it directly into their domiciliary account.
Recall that in November 2020, the banking regulator ordered that all remittances should be paid in US dollar or directly into the recipient’s domiciliary account. It later warned companies still paying in naira of stiff consequences.
This move was the CBN’s way of strengthening the naira from the free fall it experienced following the pandemic, falling oil prices, relatively closed borders, and dollar scarcity.
Interestingly, the CBN’s move comes at a time when there’s a growing focus in the remittance sector among fintech companies. A number of them have struck strategic partnerships with IMTOs to help ease the problem of international money transfers in Nigeria and Africa at large.
With these providers, Nigerians, who predominantly use cash, could quickly receive their funds in naira, without having to go through the hassle of looking for ways to convert it to naira in the black market.
We’ve reached out to some fintech companies, but the few that have responded as at press time, state that they are still coming to terms with the new regulation. The Apex bank’s directive will undoubtedly have different levels of impact for various fintech companies.