The Central Bank of Nigeria has introduced a “Naira 4 Dollar Scheme”, an incentive that pays naira to senders and recipients of international money transfers.
The policy is aimed at boosting dollar supply in the country, at a time of foreign exchange crunch that has forced the central bank to devalue the naira more than once in year.
According to the bank, recipients of diaspora remittances through CBN’s International money transfer operators (IMTOs) will now be paid N5 for every $1 received as remittance inflow.
The bank disclosed this in a circular issued to all Deposit Money Banks (DMO) and IMTOs dated March 5 and signed by the Director, Trade and Exchange Department, A.S Jibrin.
According to the bank,the scheme is an incentive to sustain the encouraging increase in inflows of diaspora remittances into Nigeria.
The scheme takes effect from March 8 and ends on May 8.
“In the light of this, the CBN shall, through commercial banks pay to remittance recipients the incentive of N5 for every $1 remitted by sender and collected by designated beneficiary. This incentive is to be paid to recipients whether they prefer to collect the USD as cash across the counter in the bank or transfer same into their domiciliary account,” the memo reads.
Some Nigerians have questioned the move, saying it will likely lead to more devaluation of the naira.
“Isn’t this essentially printing more naira, and further devaluing it against the USD?” a Twitter user, @gb3nga, tweeted.
“If I get 5 naira for every dollar deposited, then I’m basically making it unnecessarily cheap to acquire the naira. Thus devaluing the wealth of those who hold all their savings in naira.”
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“I think the plan using this system is actually to improve the value of the naira, but it wouldn’t work certainly, like other failed policies,” said another user, @Amir_Onimisi.
“When the demand for the naira is high it increases the value. And in this case for every one dollar, you demand 5 naira…”
They suggested the government only needs to streamline the money transfer system and make the exchange rate favourable.
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