The Central Bank of Nigeria (CBN) yesterday stopped hundreds of global remittance companies from operating in the country.
The affected firms, will no longer receive nor disburse the estimated $21 billion per annum collections from Nigerians in the Diaspora to local recipients.
However, Western Union, MoneyGram and Ria were endorsed by the CBN to continue their operations in the country.
WorldRemit, one of the international money transfer operators affected by the policy, said it sends more than 40,000 money transfers to Nigeria every month and receives more than $20 billion in remittances annually from migrants around the world.
Investigations showed that many of the affected firms were not licenced to operate in the country and may have breached some of the operating guidelines. An industry source alleged that the affected firms were withholding dollar inflows meant to deepen foreign currency liquidity in the country, and were paying local beneficiaries with naira instead of dollars.
“The operators need to do their business with integrity and international best practices. A situation whereby they withhold the dollar supplies and pay Nigerians in local currency can no longer be accepted,” the source, who is conversant with the operation of international money transfers said.
“The operators opened local accounts where they disburse naira instead of dollar to beneficiaries. This has to stop,” the source said.
WorldRemit founder and CEO, Ismail Ahmed said: “This move is arbitrary, inexplicable and hugely detrimental to the Nigerian Diaspora who rely on a hundreds of money transfer companies and banks, providing them with choice, convenience and competitive pricing.
“Even now, as we suspend our service, there is no clarity on why this sudden change has happened. If it is on the basis of new rules, there was no warning. If it is a re-interpretation of old rules, local correspondent networks and banks should have been forewarned.
“This reverses the progress made by the country when the Nigeria Central Bank banned Western Union’s exclusivity agreements that had created a near-monopolistic position in the international money transfer market. Western Union controlled 78 per cent of the market share when CBN outlawed exclusivity agreements with local banks.”
Until now, money transfer operators such as WorldRemit operated via partnerships with licensed local correspondents in Nigeria, enabling transfer of funds to local bank accounts – providing a more efficient service than the SWIFT infrastructure.
WorldRemit has also raised concerns about a 2015 memorandum from the Central Bank of Nigeria, setting out minimum requirements for companies offering international Mobile Money transfer services to Nigeria.
The guidelines specify that any company offering Mobile Money transfers must have minimum net assets of $1 billion and have been operating for more than 10 years. WorldRemit is the world leader in transfers to Mobile Money accounts and had been planning to launch Mobile Money services in Nigeria.