Last week, the Central Bank of Nigeria announced “Naira4Dollar,” a scheme which gives people receiving money from outside the country ₦5 for every dollar.
My first sentiment when I heard about the policy was skepticism, given the CBN’s recent history of trying through several policies to use foreign remittances to solve an FX liquidity problem. It hasn’t had a lot of success on that front and if it doesn’t find a solution soon, another devaluation of the Naira may be looming.
What’s under the hood of the new scheme?
One of the reasons a lot of people don’t receive remittances from banks and CBN authorised international money transfer organizations (IMTOs) is the high transaction costs.
But some banks are offering ₦3 instead of ₦5 for every dollar
: One banker who spoke to TechCabal off the record said, “At the meeting, the CBN casually mentioned ₦2 at first and also ₦3 secondly and eventually settled for ₦5 and that’s why if you observe, some banks released varied communications of the amount.”
The one liner
: What the CBN is trying to do is lowering that transaction cost and it’s a strategy that has been used in Bangladesh with some degree of success so there might be something here.
But it’s not so straightforward. On Thursday, I spoke to a few experts and wrote this article
that tells you everything you need to know about the Naira4Dollar promo.