The Central Bank of Nigeria (CBN) has secured the cooperation of some International Money Transfer Organisations (IMTOs) to double the flow of remittance to Nigeria in its current bid to consolidate the modest improvement in the foreign exchange market dynamics.
The CBN Governor, Mr. Olayemi Cardoso, who disclosed this in Washington DC on Saturday also said that the task force formed by the apex bank to handle the process of remittance inflows into Nigeria will be reporting directly to his office.
In an apparent sense of pride and confidence, Cardoso has also stated that the naira has been declared the best-performing currency globally as of April 2024.
The apex bank governor, while speaking at the end of the 2024 Spring Meetings of the International Monetary Fund (IMF) and the World Bank, said the federal government has reached an agreement with the IMTOs to set up a Collaborative Task Force to double remittance inflows into the country.
He said: “We came here with a very clear agenda and have held highly significant intentional meetings. Each one further supports the stability and ultimate growth of the Nigerian economy.
“Besides our meetings with multilateral financial institutions and foreign investor groups with a keen interest in developments in Nigeria, including the U.S Chamber of Commerce, we have very productive discussions with leading International money, transfer operators, IMTOs where we collectively committed to doubling remittance funds through formal channels into Nigeria in the immediate short to medium term.”
Reporting the activities of the current leadership of the apex bank, Cardoso explained that it’s been a season of challenges varying from inflation and FX volatility.
“In the six months since assuming 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 FX market, we have transitioned from firefighting to strategic planning across key areas. These areas include improving the ease of doing business in Nigeria, consolidating and sustaining 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 accessibility to the financial system.”
Present at the meetings were representatives of domestic and international stakeholders in the Nigerian forex market such as Lemfi, Flutterwave, J.P. Morgan, Remitly, VertoFx, Interswitch, BudPay, Makeba, TapTap Send, Visa, Venture Garden Group, other players in the remittances industry.
He disclosed that the value of the naira improved significantly in April, saying “April saw the naira emerge as the best-performing currency globally, supported by bullish sentiment from leading international investment institutions.
“Our FX market is experiencing robust activities, with turnover reaching levels not seen in over seven years.”
This liquidity boost, he said, is instilling confidence among investors, businesses, and other partners, ensuring fluidity in their interactions with Nigeria’s FX markets.
Cardoso said, nonetheless, the CBN remains vigilant, recognising the challenges that persist, such as elevated inflation driven by rising food prices, transportation costs, and energy expenses. “We note that inflation though rising is doing so at a decelerated rate and we are confident will soon commence a fall.”
According to him, security concerns in food-producing regions and infrastructure challenges also demand attention, adding that the CBN has implemented some policy reforms to address some of these various pressures.
He admitted there were other areas yet to fully address, saying, “While I am confident enough today to talk about some of our early success, I am at the same time extremely mindful of our ongoing challenges.
“We still have work to do in solving all our problems, however, we do have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with our key stakeholders including investors, banks, businesses – and, notably, our counterparts on the fiscal side.
“We have recommitted our stance to orthodox monetary policy, and it is heartening to see the efforts being put up have started yielding results, especially in terms of rebuilding trust and confidence in our economy and the leadership.
“In summary, this week has been extremely productive, and we are eager to translate our discussions into tangible outcomes as we return home,” he said.
Cardoso said various meetings with portfolio investors were part of a continuous engagement for the nation’s growth, adding that the response from this group of investors has been positive.
“Reactions got was that the positive sentiment will continue,” he stated.
On the exchange rate, Cardoso said the apex bank is doing everything to ensure there is a stable exchange rate and a rate that finds an adequate price discovery level.
Corroborating the CBN’s governor’s claim, the minister said discussions with direct and portfolio investors were positive, saying most of them expressed their intention to partner Nigeria.
Not only this, he disclosed that apart from multilateral banks, organisations like Bill and Melinda Gates Foundation have shown interest in working with Nigeria as well.
Also speaking at the press conference, Nigeria’s Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, said lessons have been learnt about the state of the world economy which had been the subject of the week-long meeting.
“We talked about the global economy because this has been a week of conversation about the world economy and in brief, the reality is that the global economy has not quite recovered from the Covid-19 shock and subsequent shocks, which we are all aware of but America has.
“The American economy has gone back to pre-Covid-19 levels. It’s grown about eight percent over the last four years, whereas the other rich countries and some emerging countries have grown by less than that.”
He said the major lesson learnt is that in attempting to reform an economy and in trying to fight inflation, the sooner the measures are implemented robustly, the quicker, the period of transition back to a growing economy.
Nigeria relies heavily on remittance inflows to boost dollar supplies, which, according to the World Bank, average around $20.5 billion.
Some of the objectives outlined by the apex bank at the meeting include the need to reduce transaction costs associated with remittances, which the CBN identified as a significant barrier to formal inflows.
Another issue that came up was the need to double remittance inflows via formal channels, establishment of a stakeholders’ forum on IMTOs and Compliance standardisation: The importance of standardising compliance processes was underscored, with the CBN expressing its commitment to collaboration with regulators and relevant agencies to streamline remittance payment channels, reduce friction, and enhance efficiency.
Festus Akanbi and Deji Elumoye
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