The Central Bank of Nigeria (CBN) has recorded a remarkable 63.7% increase in Inward Money Transfer Operations (IMTO) inflows during the first nine months of 2024. The inflows surged from $2.33 billion in 2023 to $3.82 billion in 2024, signaling a robust recovery and growth in remittances, which have become a vital economic lifeline for Nigeria.
Key Drivers of IMTO Inflows Growth
Several factors have contributed to this significant increase in IMTO inflows:
1. CBN’s Strategic Reforms: Under Governor Olayemi Cardoso, the CBN has introduced key policy measures that have strengthened the remittance framework. These include:
- Elimination of Exchange Rate Caps: In January 2024, the cap on exchange rates quoted by IMTOs was removed, fostering a more competitive and market-driven environment.
- Increase in Licensing Fees: The IMTO licensing fee rose from N500,000 to N10 million, with a minimum operating capital of $1 million, enhancing regulatory compliance and industry standards.
- Approval of New IMTOs: Fourteen new Approvals-in-Principle were granted, encouraging competition and innovation in the remittance sector.
- Collaborative Task Force: A dedicated task force was established to double remittance inflows, focusing on transparency, diaspora engagement, and efficient foreign exchange transactions.
2. Rising Diaspora Remittances: Improved economic conditions in host countries have led to increased remittances from Nigerians abroad, providing crucial support for their families back home.
3. Adoption of Digital Payment Platforms: The COVID-19 pandemic has accelerated the use of digital payment platforms, simplifying the process of sending and receiving funds across borders.
Economic Implications of Increased IMTO Inflows
The surge in IMTO inflows carries several positive implications for Nigeria’s economy:
1. Boost to Foreign Exchange Reserves: The inflows provide a critical source of foreign exchange, helping to stabilize the Naira and mitigate the impact of external economic shocks.
2. Stimulation of Economic Activity: Remittances are often used for consumption, investment, and essential services, driving economic activity and contributing to GDP growth.
3. Poverty Alleviation and Inequality Reduction: These funds are crucial for low-income households, supporting basic needs such as education, healthcare, and housing, thereby reducing poverty and inequality.
4. Increased Market Confidence: The reforms and resulting surge in inflows have bolstered market confidence, reassuring both local and international investors about Nigeria’s economic prospects.
Monthly Breakdown of IMTO Inflows
The monthly inflows for 2024 highlight the progressive growth:
- January: $390.86 million (+32.4% YoY)
- February: $326.91 million (+67.4% YoY)
- March: $363.76 million (+30% YoY)
- April: $466.11 million (+83.3% YoY)
- May: $404.75 million (+45.3% YoY)
- June: $389.79 million (+40.2% YoY)
- July: $552.94 million (+130% YoY)
- August: $585.21 million (+115.8% YoY)
- September: $336.61 million (+40.9% YoY)
Conclusion
The 63.7% rise in IMTO inflows underscores the effectiveness of the CBN’s reforms in revitalizing Nigeria’s remittance sector. This growth is pivotal in bolstering Nigeria’s foreign exchange reserves and supporting economic stability. Sustaining this momentum will require continuous policy innovation and active engagement with the Nigerian diaspora, ensuring that remittances continue to be a strong pillar of the nation’s economic resilience.
