The Central Bank of Nigeria (CBN) said it was looking to attract $2 billion in diaspora remittances from Nigerians abroad as the country’s foreign exchange reserves shrink steeply and Africa’s biggest economy faces a liquidity crunch across various segments of its currency market.
CBN Governor Godwin Emefiele said at a press conference in Abuja on Thursday that countries like Pakistan, who shared common demographic character with Nigeria, regularly earned around $2 billion through overseas remittances.
The regulator this week announced a policy shift that enabled recipients of international money transfers to receive funds in a foreign currency. Until the declaration, beneficiaries had been accessing such inflows in naira.
“I’m aware from the data available that, for instance, Pakistan, even in the midst of COVID-19 receives $ 2billion monthly from flows from Pakistani in diaspora,” the CBN governor said.
“If Nigeria is able to receive even if it is just $1 billion monthly or moving close to $2 billion monthly, I’m so certain you all know what will happen to the exchange rate in Nigeria.”
Emefiele is optimistic that commercial banks won’t have recourse to the CBN to fund their commercial operations again should the $2 billion monthly target be met.
“So, that is why we are saying that we want to aggressively take on this and see how this will help our economy.”
Nigeria’s foreign exchange reserves, currently at $35.3 billion, has seen about 3.6 per cent contraction since touching $36.6 billion in May because a slump in the prices of oil and lockdown measures introduced to tame the spread of the coronavirus dented revenues from crude exports, which provide over 90 per cent of its forex earnings.
That has created tremendous pressure for the naira at the official foreign exchange market window, where a heap of dollar demand from manufacturers and exporters remains uncleared, forcing them to patronise the informal black market, where the rate of accessing the greenback is much higher. The local currency hit its weakest level in four years on the parallel market on Monday.
Emefiele said the new policy would take effect from Thursday, noting that the CBN had directed deposit money banks to close all their Naira general ledger though which naira remittances were executed in the past.