‘To spur liquidity’ — CBN grants approval in principle to 14 new IMTOs

The Central Bank of Nigeria (CBN) has granted approval in principle (AIP) to 14 new international money transfer operators (IMTOs).

IMTOs carry out cross-border fund transfer services for individuals and entities residing abroad to recipients in Nigeria.

Approval in principle is a conditional acceptance of a proposal subject to meeting other requirements for final approval.

CBN granted the AIP amid plans to double foreign currency remittance flows through formal channels.

Hakama Sidi Ali, CBN’s acting director of corporate communications, spoke in Abuja on Wednesday.

Ali said the approval will help increase the sustained supply of foreign exchange in the official market by promoting greater competition and innovation among IMTOs to lower the cost of remittance transactions and boost financial inclusion.

“This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira,” she said.

Ali also said the move by the apex bank is a means of reducing the historical volatility in Nigeria’s exchange rate caused by external factors, such as fluctuations in foreign investment and oil export proceeds.

On April 20, Olayemi Cardoso, CBN governor, said the financial regulator collaborated with IMTOs to collectively commit to doubling remittance flows through formal channels into Nigeria.

“We’ve had very productive discussions with leading IMTOs where we collectively committed to doubling remittance flows through formal channels into Nigeria in the immediate short to medium term,” Cardoso said.

He said CBN has also set up a task force to address bottlenecks hindering flows through formal channels.

Cardoso said the task force would report directly to him.

In the first quarter (Q1) of 2024, Nigeria recorded $282.61 million as total direct foreign exchange (FX) remittances.