Naira, Nigeria’s currency is set to stabilise further as the Central Bank of Nigeria (CBN) has agreed with the International Money Transfer Operators (IMTOs) and foreign investors to double remittance flow in the country, in the short to medium term.
To achieve this, the CBN said it is setting up a task force that will ensure that all hindrances to the foreign inflows are addressed.
Olayemi Cardoso, governor of the CBN, disclosed this at a joint press conference of the ministry of finance and the CBN in Washington D.C. at the International Monetary Fund (IMF)/World Bank meetings.
Foreign exchange inflows to Nigeria rose to $2.3 billion in February, the central bank according to the CBN, driven by renewed interest from foreign investors and a rise in overseas remittances.
According to Statista the personal remittances received in Nigeria increased by 0.7 billion U.S. dollars (+3.59 percent) in 2022. In total, the personal remittances received amounted to 20.13 billion U.S. dollars in 2022.
Remittances are flows of money between immigrants and their relatives. They refer to personal transfers between resident and non-resident individuals, and the compensation of employees who are employed in an economy where they are not resident, and of residents employed by non-resident entities.
“Besides our meetings with multilateral financial institutions, and foreign investor groups, with a keen interest on developments in Nigeria, including the US Chamber of Commerce, we had very productive discussions with leading international money transfer operators IMTOs, where we collectively committed to doubling remittance flows through formal channels into Nigeria in the immediate short to medium term.
“This target is both ambitious and achievable. And we are wasting no time in setting up a collaborative Task Force reporting to myself to drive progress and address any bottlenecks that hinder flows through formal channels,” Cardoso said.
The naira weakened by the most in over a month at the parallel market on Friday, ending a rally since late March that had made the currency the world’s best performer.
A dollar sold for N1,230 in street trading on Friday, a 17 percent decline compared to N1,050 the previous day.
Traders say there was an uptick in demand on the day but still expect the naira to pare the losses in the coming days.
The naira also depreciated at the official market to N1,169.99 against the dollar on Friday — a 1.38 percent drop from the N1,154.08/$ rate on April 18.
He said in the six months since assumed the position of Central Bank governor, the challenges have been significant from grappling with inflation to addressing volatility in the foreign exchange market.
“However, with relative stability now achieved particularly in the foreign exchange market, we have transitioned from firefighting to strategic planning across key areas.
“These areas include improving the ease of doing business in Nigeria to consolidate and sustain the gains through an efficient and transparent market system and boosting financial and economic inclusion for small businesses and households. Interrogating all potential ways to leverage smarter use of technology and remote banking to reduce the cost of transactions and expand access accessibility to the financial system,” Cardoso said.
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