Okejimi: Nigeria’s Remittance Business Undergoing Transformation

Okejimi: Nigeria’s Remittance Business Undergoing Transformation

As the activities of digital money transfers operators is expected to grow in the country in line with the CBN’s Naira 4 Dollar Scheme, the Country Manager, Nigeria, and Ghana of WorldRemit, Gbenga Okejimi, in this interview speaks about how his organisation is protecting clients and ensuring safety of their funds. Oluchi Chibuzor brings the excerpts

Banks in Nigeria are now mandated to open USD bank accounts for those receiving international money transfers. What is your take on this CBN policy?

It’s a step in the right direction. By way of context, digital International Money Transfer Operators (IMTOs) like WorldRemit are known to encourage financial inclusion by driving volumes to banks and mobile money accounts. This prevents the risks associated with travelling long hours to city centres to cash funds sent via IMTOs. With the discontinuation of naira payouts and the introduction of only dollar payments, most Nigerians who do not have dollar accounts were left with no option but to resort to cash pick up, which at this time has its own risks and associated issues. The CBN has evaluated this challenge, so in the bid to drive more volumes; has encouraged banks to open dollar accounts for their customers strictly for money transfers. If a sender provides a naira recipient account to an IMTO, rather than allow the transfer to fail because of a naira account, the bank will automatically create a dollar account in the name of the intended recipient. This encourages more flows and reduces transaction failures on the part of the IMTO.

What positives does this regulation bring to Nigerians and how does it affect the economy at large?

The regulation will assist to drive more inflows to the country. It will also increase the number of domiciliary accounts owned by banks which encourages more trade and FX related transactions.

In the past, fund transfers used to be hectic in Nigeria, where are we now and what is WorldRemit bringing on-board as a major player?

In the past recipients had to travel long hours to cash funds sent via legacy players who provide brick and mortar systems. Aside from the risk associated with travelling long distances, there was also the risk of non-transparency with foreign currency and carrying cash which could lead to the recipients being vulnerable to robbery of their funds. At the formation of WorldRemit, our value proposition was to create value along with a good customer experience. This informed the full digitisation of the service on the send side, with transfers to mainly bank and mobile money accounts. We have therefore encouraged financial inclusion and brought down the costs and speed of sending remittances. This benefits both senders and receivers.

Remittances to low and middle‐income countries (LMICs) in 2020 were put at a projected rate of 7.2 per cent ($508 billion) and further decline by 7.5 per cent to ($470 billion) in 2021. What do you think could be responsible for this?

This is not unexpected considering the debilitating effects of the COVID-19 pandemic globally. A downturn in economic activities across the globe has led to the loss of employment for many. Having said this, we are optimistic that there will be an improvement in economic activities as the roll-out of the vaccines across the globe continues and governments implement several palliatives to improve the economic fortunes of their countries.

Tell us more about the recently expanded WorldRemit US Dollar payout option with your partners.

At WorldRemit, we understand the importance of making remittances available to recipients as these funds are majorly used for basic needs like education, medical and household fees etc. Many of our recipients were unable to receive funds with the sudden introduction of the USD payout, coupled with the low uptake of USD Bank accounts. To this end, we have quickly expanded our payout network covering both Bank and Cash to nine partnering banks. We are not relenting and in a few weeks, will add additional new partners to further expand the network.

As a pipeline for funds flow into Nigeria, what have been the challenges and what areas would you want the government of the day to strengthen policy-wise?

The Nigerian remittance space is currently undergoing a transformation. This is not unexpected considering the economic importance of remittances to the country. We have seen a lot of policy interventions by the Central Bank in the last three months, with the aim to increase inflows. These interventions came without consultation with the IMTOs and Banks so, therefore, created the challenge to implement quickly. It would be helpful if the CBN would consult widely and provide enough time before policy implementation. It is also important that the CBN implements and ensures compliance with their guidelines by all licensees to avert the diversion of proceeds of Money Transfers by operators.

Also, what are the key trends attracting WorldRemit to Nigeria?

Nigeria is a big market for all IMTO’s, not just WorldRemit. with a Diaspora population of between 15-17 million, comprising of some of the smartest people in the World, a thriving entertainment industry, Nollywood, the latest fashion trends, exquisite cuisine, tech capabilities comparable to the best in the World and 200 million people with a growth rate of two percent, Nigeria is a fast-growing market that is up for the taking. It is estimated that there is a Nigerian in every country of the world unless there is no activity in that country. Nigerians are well travelled and seek to help those back home even from their Diaspora abode.

Stabilising the FX rate has been a major challenge, what do you think the apex bank can do to at least regulate this fluctuation.

The issue of FX rate is not a one cap fits all. We need to have a convergence between the fiscal and monetary policies to achieve the kind of economic growth/stability we desire. Paying out remittances in foreign currency is just one of the many things that could encourage stabilisation of the FX rate. We need to reduce our penchant for foreign/luxurious goods which puts a lot of pressure on our foreign reserves. We are an oil-producing economy but we still depend on imported gasoline to fuel our vehicles and power our economy – that is a huge drain on the FX reserves. We need to invest massively in infrastructure and agriculture to attain food sufficiency.

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