The Central Bank of Nigeria (CBN) has stopped hundreds of global remittance companies from operating in the country.
The affected firms will no longer receive nor disburse the estimated $21 billion per annum collections from Nigerians in the Diaspora to local recipients.
However, Western Union, MoneyGram and Ria were endorsed by the CBN to continue their operations in the country.
WorldRemit, one of the international money transfer operators affected by the policy, said it sends more than 40,000 money transfers to Nigeria every month and receives more than $20 billion in remittances annually from migrants around the world.
Investigations showed that many of the affected firms were not licenced to operate in the country and may have breached some of the operating guidelines. An industry source alleged that the affected firms were withholding dollar inflows meant to deepen foreign currency liquidity in the country, and were paying local beneficiaries with naira instead of dollars.
“The operators need to do their business with integrity and international best practices. A situation whereby they withhold the dollar supplies and pay Nigerians in local currency can no longer be accepted,” the source, who is conversant with the operation of international money transfers said.
“The operators opened local accounts where they disburse naira instead of dollar to beneficiaries. This has to stop,” the source said.
Meanwhile, the CBN has advised Nigerians at home and abroad to beware of the activities of some unlicensed International Money Transfer Operators (IMTOs) in Nigeria.
The advice is conveyed through a press statement signed by CBN’s Acting Director of Communication, Mr Isaac Okorafor in Abuja recently.
He stated that the warning became necessary because of the activities of some unregistered IMTOs, whose modes of operation are detrimental to the Nigerian economy.
Okorafor said: “All financial services providers in Nigeria, just as in other jurisdictions, are required to be duly licensed in order to protect both customers and the financial system as well as to ensure the credibility of financial transactions.
“For the avoidance of doubt, all licensed International Money Transfer Operators, are required to remit foreign currency to their respective agent banks in Nigeria for disbursement in naira to the beneficiaries.
“The foreign currency proceeds are to be sold to Bureaux De Change operators, for onward retail to end users.
“The Central Bank of Nigeria will therefore not condone any attempt aimed at undermining the country’s foreign exchange regime.”
He concluded by advising the public to beware of the activities of such unregistered IMTOs to avoid being duped.
But WorldRemit founder and CEO, Ismail Ahmed said: “This move is arbitrary, inexplicable and hugely detrimental to the Nigerian Diaspora who rely on a hundred of money transfer companies and banks, providing them with choice, convenience, and competitive pricing.
“Even now, as we suspend our service, there is no clarity on why this sudden change has happened. If it is on the basis of new rules, there was no warning. If it is a re-interpretation of old rules, local correspondent networks and banks should have been forewarned.
“This reverses the progress made by the country when the Nigeria Central Bank banned Western Union’s exclusivity agreements that had created a near-monopolistic position in the international money transfer market. Western Union controlled 78 per cent of the market share when CBN outlawed exclusivity agreements with local banks.”