CBN: We Did Not Stop Operation of Licenced Money Transfer Operators
Describes allegation by WorldRemit as false
The Central Bank of Nigeria (CBN) yesterday described as false a report by WorldRemit, an online remittance provider that it has stopped money transfers to Nigeria.
The acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, said this in a phone interview with THISDAY last night, while reacting to a statement by WorldRemit yesterday that hundreds of global remittance companies had been forced to cease transfers to Nigeria, while Western Union, MoneyGram and Ria continue.
WorldRemit had also called “for the urgent restoration of money transfers to Nigeria as draconian new rules leave virtually all money transfer operators (MTOs) unable to provide services to the West African country.”
But the CBN spokesman said: “In Nigeria, providers of financial services are licenced just like in other jurisdictions. Here, we licenced providers of financial services, not only to protect the customers, but also to protect the financial system itself and to be able to vow for the credibility of those institutions.
“For us, only three of them are licenced – Western Union, MoneyGram and Ria. So, we didn’t stop the operations of any of these three companies.”
Nigeria recorded over $21billion remittances in 2015, the country is the sixth largest receiver of remittances in the world.
In order to improve dollar liquidity to Bureau De Change operators, the CBN recently directed banks that act as agents of international money transfer operators to commence the sale of foreign currency remittances to licensed BDCs.
But a banking industry source alleged that unlicensed money transfer firms that had been diverting dollar remittances into the country are no longer comfortable with the recent CBN directive on funding of BDCs from remittances.
“What these unlicensed agents did was they came to open naira accounts. And when our people want to remit money home, they would collect the foreign exchange there and instruct the banks here to pay naira. What that means is that the dollars don’t get to Nigeria. So they deny us that chunk of dollar supply,” the source added.
According to a statement by WorldRemit yesterday, the firm has been instructed by its local correspondents that transfers to Nigeria will no longer be processed and is, accordingly, suspending services immediately.
WorldRemit founder and CEO, Ismail Ahmed said: “This move is arbitrary, inexplicable and hugely detrimental to the Nigerian diaspora who rely on 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 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.
“It looks like all systems in Nigeria are currently geared against encouraging new entrants and competition in the mobile remittance markets. That is worrying in the extreme,” Ahmed added.