The Central Bank of Nigeria’s (CBN) latest quarterly statistical bulletin has revealed a significant 63.7% increase in international money transfer operator (IMTO) inflows for the first nine months of 2024.
Inflows rose from $2.33 billion during the same period in 2023 to $3.82 billion in 2024.
This growth has been largely attributed to a series of targeted reforms introduced under the leadership of Governor Olayemi Cardoso, who assumed office in September 2023.
What does the data say
- The year-on-year analysis of the data highlights consistent increases in monthly remittance inflows throughout 2024. In January, inflows rose by 32.4%, jumping from $295.21 million in 2023 to $390.86 million in 2024. This upward trend continued in February, with a staggering 67.4% increase to $326.91 million from $195.23 million the previous year. March followed with a 30% rise, recording $363.76 million compared to $279.79 million in 2023.
- April saw one of the most significant year-on-year increases, with inflows rising by 83.3% to $466.11 million from $254.26 million in 2023. In May, inflows grew by 45.3%, reaching $404.75 million, while June recorded a 40.2% increase to $389.79 million. The growth trajectory became even more pronounced in July and August, with inflows skyrocketing by over 100% each month. July posted $552.94 million compared to $240.35 million in 2023, while August peaked at $585.21 million, a 115.8% increase from $271.24 million. September capped the nine-month period with inflows of $336.61 million, reflecting a 40.9% rise from $238.98 million in September 2023.
- A month-on-month analysis of 2024 data highlights a general upward trend in remittance inflows, albeit with some fluctuations. In January, inflows were strong at $390.86 million but dipped by 16.4% in February to $326.91 million. March saw a rebound, with inflows increasing by 11.3% to $363.76 million. This momentum continued in April, where inflows surged by 28.1% to $466.11 million. However, May recorded a slight dip of 8.3% to $404.75 million, before rising again in June by 7.8% to $389.79 million.
- The most notable month-on-month increase came in July, with inflows surging by 41.8% to $552.94 million. August continued the upward trajectory with a 5.8% increase to $585.21 million, the highest monthly inflow recorded during the nine-month period. However, inflows eased in September, declining by 42.5% to $336.61 million compared to August’s peak.
What you should know
The surge in IMTO inflows is closely tied to the reforms introduced by the CBN under Governor Cardoso since his assumption of office in September 2023.
In January 2024, the CBN issued a circular that removed the previous cap on exchange rates quoted by IMTOs.
- Before the circular, IMTOs were required to quote rates within a permissible range of -2.5% to +2.5% around the previous day’s closing rate of the Nigerian Foreign Exchange Market.
- By the end of January, the apex bank further released revised guidelines for the operations of IMTOs. The apex bank increased the application fee for an IMTO licence from N500,000 in 2014 to N10 million in the revised guidelines. This is an increase of about 1,900% in about 10 years.
- The CBN also established a minimum operating capital requirement for IMTOs at $1 million for foreign entities and an equivalent amount for local IMTOs.
- Also, IMTOs were barred from purchasing foreign exchange from the domestic market to fulfil their obligations.
- However, with another circular, it appears that this ban has been lifted, and IMTOs can now trade on the official market.
- The apex bank earlier reached an agreement with IMTOs to set up a Collaborative Task Force to double remittance inflows into the country. The task force formed to double remittance inflows into Nigeria reports directly to Yemi Cardoso, the Governor of the CBN.
By increasing competition among IMTOs, engaging with the diaspora, and enhancing transparency in foreign exchange transactions, the CBN has strengthened the remittance ecosystem.
Also, the CBN recently granted 14 new Approval-in-Principle (AIP) to IMTOs, according to the Bank’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali.
The Central Bank’s reforms have included streamlining processes, onboarding more IMTOs, and enhancing measures to ensure an increase in the supply of foreign currencies.
These measures have evidently paid off, as evidenced by the substantial increase in remittance inflows.
This surge in remittance inflows is crucial for Nigeria’s economy, providing much-needed foreign exchange and supporting household income.
