The CEO, Blue Diamond Logistics China, and a Board of Trustees (BoT) member of Nigerians in Diaspora Organisation (NIDO), Mr Festus Mbisiogu, has commended the Central Bank of Nigeria (CBN) for the new policy on foreign exchange remittances from abroad.
Last week, the CBN, with a desire to sustain and boost inflows of diaspora remittances into the country, introduced the ‘CBN Naira 4 Dollar Scheme’ through which it will pay N5 for every $1 received as remittances inflow from Nigerians abroad through CBN licensed International Money Transfer Operators (IMTOs), with effect from March 8, 2021.
In a statement, Mbisiogu said this incentive for senders and recipients of international money transfers was novel and would revolutionise our economy as well as reduce the cost of doing businesses.
According to him, based on available World Bank data, the country’s total direct remittance inflows have averaged $21bn in the past nine years, a clear indication of the high level of diaspora remittances. The inflow in the last two years, 2019 and 2020, reduced because of the Coronavirus-19 pandemic.
‘This new policy would therefore kickstart a strong rebound in remittances to Nigeria. It would boost household consumption and small-scale enterprises. It will also ease the pressure on what is fast becoming a structural deficit on the current account due to the steady deterioration in the terms of trade,’ he noted.
Mbisiuogu further said: “Before now, there have been several efforts by the CBN to increase liquidity in the foreign exchange market through well-thought policies on diaspora remittances. For instance, in November 2020, the CBN directed all IMTOs to pay funds to beneficiaries of diaspora remittances in foreign currency (US dollars) as against the erstwhile Naira payment aimed at reducing pressure on the FX parallel market. This was aimed at increasing foreign earnings and improving liquidity across the foreign exchange windows.
‘Despite these efforts, there was still a lot of pressure on the foreign exchange market, thereby leading to a decline in the availability of foreign currency. This was so because many IMTOs and unlicensed operators are still remitting money sent from the diaspora to Nigerians in Naira, while many of the operators are hoarding dollars, thereby leading to scarcity of foreign currency in circulation.
‘But with this new policy, space for businesses to make profits on remittances and investments has been enlarged. The tendency for operators to hoard dollars will also be reduced.’
He, however, expressed worry as to what will happen when this policy expires, saying: “This scheme runs from March 8, 2021, and ends on May 8, 2021. It will be short-lived. What will happen after the expiration? Would the inflow of remittances reduce? Would operators not go back to hoarding dollars?
‘It is in this light that I urge the CBN Governor, Godwin Emefiele, to ensure that the gains of this policy will last. Even if it means reducing the incentive from N5 to N2 per dollar, there is a need to extend the deadline so that the gains would be enduring and more tangible.’
Mbisiogu, who is also the Chairman of Shanghai Engineering Works and Industrial Limited, called on Nigerians in the diaspora to seize this opportunity offered by the CBN and boost their investments at home.