It is no longer news that the Central Bank of Nigeria (CBN) has blocked money transfer operators from making transfers to Nigeria. Through the new policy, the CBN excluded a number of operators and only allowed for three companies – Western Union, MoneyGram and Ria to remain in the business. Experts had predicted this outcome as the CBN last year tightened the conditions on mobile money transfers, requiring operators to be operational in 20 countries, have a net worth of $1 billion, and have at least 10 years of experience working in the industry. Share on Facebook Share on Twitter Godwin Emiefiele CBN governor, Godwin Emiefiele Despite the harsh rules, some Money Transfer Organisations (MTOs) devised a new strategy to stay in business. They combined multiple transfers to Nigeria, selling them in bulk to Nigerian partners that needed the foreign exchange in swap deals. But the latest move by the CBN clearly directed all MTOs to “remit foreign currency to the agent banks for disbursement in naira” to customers, after which the foreign currency proceeds will be sold to foreign exchange operators. READ ALSO: Zenith Bank launches stress-free mobile banking solution This means MTOs that work through local partners and don’t have their own infrastructure to remit foreign currency to banks are out of business. Nigeria is ranked sixth among the top remittance-receiving countries in the world. Last year, the World Bank pegged remittances received in Nigeria at $21 billion. NAIJ.com lists 5 reasons why the new CBN policy on mobile money transfer is wrong and will affect Nigeria’s already fragile economy. Read below: 1. The big players in the Forex market will tighten their rates and will take advantage of this policy by making even more profit for themselves, thereby creating a cabal in the industry. 2. It will increase demand at the black market because the former bulk buyers from MTOs will look elsewhere to buy. 3. The few incoming dollar into the market will worsen scarcity of the foreign currency. 4. Customers looking for cheaper options will resort to illegal channels of money transfer to send money to their loved ones in Nigeria. 5. The move will discourage enterprising Nigerians who operate Small and Medium Enterprises (SMEs). SMEs are key to revive a battered economy like that of Nigeria at the moment 6. The move will discourage foreign investors who have interest in investing in the industry. The constant flip-flopping of economic policies by the present administration will not bode well for potential foreign investors. 7. Money remittances from Nigerians in Diaspora is the biggest stabilizer of the Naira as they put Forex directly into the hands of Nigerians and indeed the Nigerian economy on a daily basis. Putting a stop to it is injurious to an economy already in recession 8. The new policy will not stabilize rates.It will rather creates more inefficiency in an economy that desperately needs all sectors to be efficient. 9. It will open the door to possible increase in service fees and even the decline of favorable exchange rates. 10. In view of the slump in the price of crude oil (Nigeria’s biggest export), the country needs all the foreign exchange it can attract at this time.
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