Naira Continues Downward Slide Despite CBN’s Forex Remittance Initiative

The cost of dollar has continued to rise against the naira despite the Central Bank of Nigeria’s ‘Naira 4 Dollar Scheme’ aimed at wooing Nigerians abroad and foreigners to remit their money through official channels.

The apex bank in early March 2021 introduced the policy which offers recipients of diaspora remittances through recognised International Money Transfer Operators an incentive of N5 for every dollar received as remittance.

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The policy was designed to last from March 8, 2021 to May 8.

Owing to the policy, CBN reportedly received $40m two weeks ago from remittances, showing a huge jump from about $6m before the N5 incentive was introduced.

It is projected that at an average of $40m weekly from Diaspora remittances, the CBN could pocket about $160m a month, which is equivalent to $1.9bn a year.

This would mean an improvement from the $1.1b received in 2020.

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Despite the improvement from remittance through official channels, the naira has been on the fall from N480 per dollar at the parallel market to N485 by March 26.

The reserves have also shed $197.39m to settle at $34.64bn by March 25. This is from the $34.87bn which was recorded on March 5, a day before the policy was announced.

Chika Mbonu, Managing Director of KSBC Knowledge Resources Ltd said the policy acknowledges that Nigerians abroad incur some cost to transfer their money.

Mbonu noted that the policy may be too early to attract the magnitude of remittances which may be needed to improve the value of the Naira.

Apart from Naira stumbling at the parallel market, he said the implication of the incentive is that the government itself is losing money.

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He said if the policy beefs up remittance inflow which would in turn support naira, the CBN may extend the date.

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