The Central Bank of Nigeria (CBN) has introduced the CBN “Naira 4 Dollar Scheme” as an incentive for senders and recipients of international money transfers.1 More specifically, all recipients of diaspora remittances through CBN licensed International Money Transfers Operators (IMOs) will be paid N5 per $1 received as remittance inflows in addition to the USD sent from abroad. This will however last from March 6, 2021 to May 8, 2021. The Naira 4 Dollar Scheme is being put in place to incentivize foreign exchange inflows into the country and increase foreign reserves. The scheme is likely to deter the CBN from further devaluing the currency following improved foreign exchange inflows. However, the effect of the scheme on Nigeria’s balance of payment account should be seriously considered in order not to push the country into further deficit.
March 24, 2021
Nigeria Economic Update (Issue 10)
Related
Nigeria Economic Update (Issue 21)
Recent
data from the National Bureau of Statistics (NBS) shows that the value of
capital imported to Nigeria declined by 54.34 percent; from $1.56 billion
2015Q4to $710.97 million in 2016Q11. This is the lowest value since
the data was first released in 2007. Huge declines in Portfolio Investment
(71.54 percent) and other Investment (44.84 percent) were the major drivers of
the trend within the period. A myriad of factors have contributed to the
decline in investments. The plunge in crude oil prices, and the resultant negative
signals on investors confidence, was a key factor. This was exacerbated by the
FOREX restrictions and delays in the assentation of 2016 Appropriation Bill.
While the slight increases in oil prices and the recent signing of the budget
into law could improve the general economic prospects, monetary authorities need
to proffer solutions to the negative effects of the current FOREX restrictions
on investments.