How To Benefit From The Naira To Dollar Scheme

According to the International Monetary Fund (IMF), remittance is money sent from foreign countries or economies. These monies are sent by people who move to new countries from their home countries temporarily or permanently.^[1] Remittance is majorly comprised of cash items. It can sometimes be non-cash items that flow through formal channels such as electronic wire through International Money Transfer Operators (IMTOs) and informal channels.

Remittance is the money sent by a migrant to their home country or sent to family members in one’s home country. It is a transfer of cash which is non-commercial by a migrant or a member of the diaspora community to family or persons in their home country.

Nigeria alone accounts for almost half of the remittance that comes to sub-Saharan Africa. This remittance, in 2018, amounted to about $24 billion, which accounts for and accumulates to over 6% of Nigeria’s Gross Domestic Product.^[2]This remittance has been on a steady increase over the years. Statistical data show that the remittance by Nigeria in the past six years has increased by more than 126%. The remittance in Nigeria is expected to grow to as much as about $30 billion in the year 2021, according to the report published by PricewaterhouseCoopers.

Naira4Dollar Scheme

In an effort that seemed to incentivize dollar remittance by every possible means, the Central Bank of Nigeria released a circular to International Money Transfer Operators (IMTOs), Deposit Money Banks (DMBs), or commercial banks and the public in general. The circular stated that from Monday, 8th March 2021, through to Saturday, 8th May 2021, there will be an additional 5 naira credit alerts on every $1 received through remittance, and CBN will pay this 5 naira on every dollar to the recipient’s bank account.

That is, if someone sends, say, $20,000, CBN will facilitate and credit an additional 100,000 naira to the recipient’s account. Also, when someone sends $5,000 through remittal sources, CBN will credit an additional 25,000 naira to the recipient’s account. The scheme has, however, been indefinitely extended.

Who can benefit from this scheme?

For recipients to benefit from the Naira4Dollar scheme, the sender must process the remittance through any registered IMTOs such as MoneyTO. The transferred funds will then be sent into a DMB (Deposited Money Bank) operated account, e.g., a UBA account. Thus, if a friend or family member abroad is sending you money through cryptocurrencies or any other platform, you will not be able to benefit from the Naira4Dollar scheme.

Reasons for the Naira4Dollar scheme

The Central Bank of Nigeria and the Nigerian government came up with the Naira4Dollar scheme because CBN thinks those inflow from remittance can solve the country’s problem of FX liquidity. After all, the inflows are more than 11 times the country’s Foreign Direct Investment (FDI). For this reason, the scheme was extended indefinitely by the Central Bank of Nigeria.

The diaspora remittance has been seen to sustain Nigeria’s foreign exchange market liquidity potentially. The liquidity has recently been badly affected by the coronavirus pandemic and, consequently, the decline in crude oil revenue. Despite their best efforts, CBN has encountered challenges in maintaining foreign exchange liquidity.

The challenge is that a massive chunk of the inflow from diaspora remittance does not come into Nigeria through the appropriate and official channels such as the approved IMTOs, DMBs, or Money Transfer Agencies (MTAs). Due to the high rates and transaction costs incurred when using these official channels, most people in diaspora tend to boycott the IMTOs and MTAs and instead opt for other unofficial channels that offer lower rates and relatively lower transaction fees and who also pay remittances in naira.

MoneyTO

In a bid to create customer satisfaction, convince, and solve the issue resulting in people on the diaspora boycotting the IMTOs, MoneyTO, an approved IMTO headquartered in London, United Kingdom, offered a solution. In 2020, MoneyTO launched its company and financial remittance services in Nigeria. MoneyTO, as part of its business objectives, is constantly seeking ways to improve its services to achieve customer satisfaction.

Some of the ways MoneyTO has tried to achieve customer satisfaction include offering a relatively reduced and better transaction fee on remittance. MoneyTO also provides support via online chat on their website, online video calls, telephone, Facebook, and emails. In addition to this, MoneyTO strives to offer the best values to customers for less. Their transaction fees and exchange rates are the best on the market. These unbeatable rates mean that recipients of remittance will always receive more money for every dollar they receive compared to other remittance services.