Nigeria follows India’s trail with new incentive to boost diaspora remittances

The Nigerian central bank will attempt to replicate a tactic that worked for India, the largest recipient of diaspora remittances, as it seeks to boost remittances from Nigerians abroad.

Starting Monday, March 8, Nigerians who use formal channels to receive dollars from abroad will get 5 naira for every $1 they remit through licensed international money transfer operators and commercial banks, the central bank said in a circular published late on Friday. The program will run for 60 days.

Godwin Emefiele, the CBN governor, said a similar incentive was tried in India with success.

“We have also noted concerns around the cost of remittances and we are working to reduce that to encourage even more inflows,” Emefiele said at a webinar organised by Fidelity Bank for Nigerians in diaspora, Saturday.

Nigeria is turning its attention to diaspora remittances as it seeks to boost dollar inflows into the country after a difficult past year that saw dollar flows dry up on the back of lower oil exports, causing shortages of the greenback.

In December 2020, the CBN also unveiled new rules on remittances allowing people getting cash from friends or family abroad to be paid in US dollars. This marked a divergence from the usual practice of paying in naira which discouraged diaspora inflows via official channels.

Economists say the latest incentive by the CBN to boost diaspora inflows could ease the pressure on the naira which last traded at N411 per dollar at the investors and exporters window.

India followed by China, Mexico, the Philippines, and Egypt were the top five countries in 2020 to receive foreign remittances, the World Bank said in its latest report.