Nigeria ends 3-year ban on naira payments for remittances
In November 2020, the Central Bank of Nigeria (CBN) declared that Nigerians could only receive remittance payments through the U.S. dollar. Three years later, it has lifted the ban and will now allow remittances to be paid in the naira, a move it hopes will boost remittances amid a 20% dip.
By Anna B Kiwanuka
In a significant move, the Central Bank of Nigeria (CBN) has reversed its November 2020 decree, allowing Nigerians to receive remittance payments in the naira, the U.S. dollar, or the eNaira, the country’s digital currency. This comes amid a 20% dip in half-year remittances to Africa’s largest economy. The CBN hopes that offering the option of open market rates for remittances will motivate more people to use official channels, thereby increasing remittance inflows.
Previously, the ban on naira remittances aimed to simplify and improve the administration of diaspora remittances, but it limited options for beneficiaries. With the harmonization of exchange rates, the disparity between official and parallel market rates has been addressed, making official remittance channels more attractive.
While the CBN has also opened remittances through the eNaira, the digital currency has yet to gain significant traction. Despite Nigeria’s world-leading digital asset awareness and high Bitcoin adoption rates, many remain apprehensive about the eNaira, opting for other payment methods like cash or bank transfers.
The latest policy shift is expected to create a positive impact on remittance inflows, bolstering Nigeria’s position as a key player in remittances in Africa. By offering more flexibility and choices, the CBN aims to channel remittances through official channels, ultimately contributing to the country’s economic growth and financial stability.