Okejimi: New CBN Remittance Policy Gives more Value for Transfers
The Central Bank of Nigeria in December 2020 issued new guidelines on Diaspora and other remittances which allows beneficiaries to receive their inflow in foreign currencies. In this interview, Country Manager, Nigeria, and Ghana at WorldRemit, Gbenga Okejimi, speaks on the policy and how his organisation is complying. Goddy Egene presents the excerpts:
The Central Bank of Nigeria last year directed that international money transfer operators (IMTOs) in Nigeria begin remittance payouts in United States Dollars, how would you explain this to an average Nigerian?
This simply implies that all remittance transfers to Nigeria via international money transfer organisations like WorldRemit will now be paid out in dollars rather than the local currency – naira. The objective is to ensure that recipients get fair value for their transfers which will also help to increase US dollar supply at the retail end and ultimately encourage appreciation of the naira.
We understand that there were some IMTO’s that resisted CBN directives. On the contrary, how did WorldRemit react to the development?
As a matter of fact, WorldRemit was the first IMTO to implement the CBN directive globally as we began USD payouts immediately after the announcement. We have been at the forefront of digital transformation in remittances with the focus on financial inclusion. However, we appreciate that some of the countries where we operate are cash reliant, so as a digital company we were able to innovate and roll out the service in Nigeria without much disruption to the satisfaction of our many customers.
Can you tell us a bit more about how remittances were paid in the past before the new CBN directive?
USD payout is not new to Nigeria; it was discontinued sometime in 2013 by the CBN. Before now however, it was a dual currency policy where recipients could choose either Naira or USD unlike now where it is strictly US dollars that banks are permitted to pay to recipients.
In your opinion, how will this new development impact your customers and the Nigerian economy?
Customers will get fair value for their transfers as I am sure you will agree with me that $100 in the United States is the same thing as $100 in Nigeria. The customers will then have the choice of changing this currency in the bank or with the Bureau du change (BDC). In terms of the economy, it improves the retail supply of the USD with the objective of stimulating local currency appreciation.
How will you assess WorldRemit’s USD payouts options, in comparison to what it used to be before?
WorldRemit has several partner banks in Nigeria that payout USD to recipients, in fact, we have the largest bank payout network for transfers to USD bank accounts in Nigeria as we speak. We are continuously adding to the network by onboarding more partners to make our services available to more customers. The Central bank has also pledged adequate support to facilitate the supply of USD notes.
Who are your current financial partners for payouts and how are you looking to collaborate with more financial institutions?
Currently our partners include, Access Bank, Guaranty Trust Bank, Fidelity Bank, First Bank, First City Monument Bank, Union Bank, UBA, Polaris Bank and Zenith Bank. We are also discussing with some other partners to broaden our cash payout network. The extensiveness of the network is important for USD payout, hence the need to onboard more partners to widen the network.
So how are you working with other players to ensure sufficiency of cash reserves for remittances?
We acknowledge the availability of U.S dollar notes as central to the success of this policy, and in this regard, the CBN has confirmed that USD notes are readily available for supply to all banks. On our part, we support the bank as much as we can on the importation of USD notes and provide them with feedback when customers complain about non-availability of U.S dollars. Basically what we try to do is to ensure that banks have USD in their vaults in the right mix because it is also important that they leave the lower dollar bills and every other bill available so that customers can always have access to funds.
When it comes to receiving international remittances, there are certain challenges in Nigeria. How is WorldRemit helping with this?
According to the World Bank, Nigeria is the biggest remittance recipient in Sub-Saharan Africa with a Diaspora standing of about 17 million. Undeniably, there is a huge potential for remittances to increase over the coming years. Remittances have also contributed to financial inclusion, helped bridge gaps in forex and assisted households in paying school fees, electricity, and medical bills. World Bank also said remittances account for approximately six per cent of Nigeria’s GDP and even exceeds receipts from oil and gas revenue. At WorldRemit, we are a digital innovator seeking ways to create opportunities for our customers to ensure that they receive their funds at a convenient, safe manner and at a very reduced cost. This is our ultimate objective. WorldRemit is collaborating with the Nigerian government to ensure that remittances continued to play a huge part in the development of the economy. Last year, WorldRemit had embarked on an entrepreneurial program which rewarded some customers in Nigeria with the sole objective of helping them grow their businesses and bring to life their new ideas.
Since WorldRemit began its business operation in Nigeria, how will you assess the market in terms of remittances and its impact on the country’s economy?
Remittances are a huge driver for Nigeria and constitute a large chunk of FDI inflows. Knowing how much human capital Nigeria exports annually, one should be able to estimate the value of remittances received into the Nigeria. According to a report by PricewaterhouseCoopers (PwC), Nigeria is one of the top five nations with high remittance inflows globally and in the last three years, remittances into Nigeria have been on the average benchmark of about $25 billion. Looking into the future, we expect that with the commencement of the Africa Free Continental Trade Agreement and the strong push for intra-African trade and integration, the Nigerian market will continue its sustainable growth.