CBN’s Naira4Dollar Scheme attracts $40m remittances in a week

The Central Bank of Nigeria’s Naira4Dollar scheme may have attracted about $40 million in foreign remittances in one week, according to a reliable source with knowledge of the scheme.

According to Voice of Nigeria (VON) sources the scheme had performed a lot more than expected as remittances via commercial banks have picked up suggesting Nigerians in the diaspora had embraced it.

The CBN received circa $40 million last week from remittances up from about $6 million before the policy was introduced. At $40 million a week the CBN could be attracting about $160 million a month or $1.9 billion per annum. This will be higher than the estimated $1.1 billion received in 2020 from diaspora remittances but much lower than the $3.2 billion received in 2019.

The central bank captures remittances in its Balance of Payment report and the Foreign Exchange Flows data. While the BOP includes non-cash items remitted into Nigeria, the Foreign Exchange Flows Data records cash items only.

Further reports show that commercial banks in Nigeria are automatically opening domiciliary accounts for Beneficiaries of diaspora remittances in Nigeria under the CBN’s Naira4Dollar scheme. As the beneficiary receives the inflows, N5 for every dollar remitted is a credit to the naira account of the beneficiary.

The CBN Naira4Dollar scheme appears to be recording success since its introduction three weeks ago. A $40 million a week inflow suggests most of the dollars are either in domiciliar account of customers or withdrawn and exchanged at the black market.

The CBN believes remittances paid in dollars and sold on the streets will improve liquidity in the retail end, thus strengthening the exchange rate.

However, the latest information suggests the exchange rate between the naira and dollar is N486/$1 higher than the N480/$1 exchanged just before the new policy was introduced.

At $40 million the CBN would have incurred a cost of about N200 million.