Nigeria: CBN's New Initiative for Outbound Money Transfer

THE Financial world today has become a global village in all its ramifications, following rapid increase in local and international transactions across. International and regional trades have similarly, continued to increase in volumes, giving room for improved movement of funds, goods and services from one country to the other.

Before now, the inbound International money transfer (a situation where Nigerians abroad transfer money to Nigeria) was more pronounced than the outbound transfer services (where Nigerians willing to send money in Naira to their wards and relations abroad and to be paid in Foreign Currency) were denied such opportunities.

Several relatives, business partners and stakeholders in money transfer transactions, within and outside the country had hitherto, witnessed hectic times in meeting specific and urgent needs of their people and businesses. Little wonder that the recent move by the Central Bank of Nigeria (CBN) to introduce the outbound money transfer services was described by economic watchers as a good sign of things to come, as it is geared towards providing alternative channel for foreign exchange transfer in serving the needs of small foreign exchange end users.

The Apex bank recently increased the maximum value for the recently introduced outbound International Money transfer Service from $2,000 per transaction to $5,0000 per transaction. The Bank disclosed this in a circular posted on its website tittled, "Guidelines for the Operation of International Money Transfer Services (IMTS) in Nigeria--review of allowable limit".

The new era, experts say, will end the idea of going to the Bureau de Change or banks to buy foreign currency before sending money abroad. It is against this backdrop that the Central Bank of Nigeria (CBN), decided to put in efforts to ensure that Out bound money transfer services was introduced to reduce all former known hardships for the citizens, encourage steady economic growth and development. Other objectives of the move is aimed at providing minimum standards and requirements for International Money transfer service operations in Nigeria, specify delivery channels for Offering International money transfer services (inbound/outbound) in a cost effective manner, provide an enabling environment for International money transfer services in the nation's economy, specify minimum technical and business requirements for various participants in the International money transfer service industry in Nigeria as well as provide broad guidelines for implementation of processes and flows of International Money Transfer services from initiation to completion.

The apex bank derive its powers for this all- important assignment from the country's constitution stated thus: "In exercise of the powers conferred on the bank by Section 2 [a] of the CBN Act, 2007 and Section 57 [2] of the Banks and Other Financial Institutions Act [BOFIA], Laws of the Federation of Nigeria, 2004, to issue Guidelines for the maintenance of adequate and reasonable Financial Services to the public,; the CBN hereby, issues the following guidelines for the regulation of International money transfer services in Nigeria."

In its circular released on 3rd October, 2014 and sent to all Authoriszed Dealers, Money Transfer Services Operators and The General public, tittled, "Re-guidelines for the operators of International Money transfer service [IMTS] in Nigeria---Review of the allowable limit , the apex bank said: "Further to the recent guidelines on the International Money transfer Services referenced TED/FEM/FPC/GEN/01/016 dated September 26, 2014, particularly paragraph 3,6,1, Authorised Dealers and members of the General Public are hereby notified that the threshold of $2,000,00 per transaction has been reviewed upward".

The circular posted on its website tittled: "Guidelines for the Operation of international Money Transfer Services (IMTS), in Nigeria--review of allowable limit" signed by the CBN Director of Trade & Exchange department, O. I. Gbadamosi further said, accordingly, "The allowable limit for the Outbound International Money Transfer of $2,000,00 per transaction has been increased to $5,000,00 or its equivalent per transaction".

Gbadamosi however, noted that is is important to note that this service is only applicable to "person-to-person" transfer. In his words: "For the avoidance of doubt, corporate entities are not allowed to use this product".

Commenting on the increase of the threshold, the Deputy -Director, Banking and Payment System department, of the CBN, Mr. James Omebere Iyari, said: "We are happy that with the new threshold would lead to more transparency and disclosure".

Meanwhile, Banks has started deploying outbound money transfer services to ease the stress of sending money from Nigeria to individuals outside the country. Before now, banks could only provide inbound money transfer services. Under the inbound money transfer, an individual living abroad can send money to his person in Nigeria, this was the one many Nigerians were used to. However, there are also people in Nigeria, who need to send money to friends or a relative living abroad. This may either be Nigerians or any of the 10 million foreigners working in Nigeria.

One of the benefits of this new order is that it could be a gift to friends or family living abroad. It is also beneficial to a travelling child who needed more funds. . In a nutshell, it is the exact opposite of inbound money transfer, which many Nigerians are more familiar with.

According to the CBN Guidelines, an individual can send up to $5,000.00 to another individual abroad. The outbound money transfer service will help to curb money laundry and conserve forex outflows.

Reliable sources from the CBN told The Guardian that the new measure "would ease access to forex users, especially those with little demands like pocket money for wards schooling outside, ease access for foreign exchange to small parts buyers, ease demand pressure on BDC. What is means is that you pay Naira here and your wards receive foreign currency abroad.

In August, the CBN, Western Union and FirstBank launched the first outbound money transfer service. Speaking at the launching ceremony, CBN Governor, Godwin Emefiele, said that the service is targeted at remittances by individuals to dependants, including children leaving abroad and for other person-to-person needs.

According to him, the system would also simplify money transfer process in Nigeria. he said, "Today, out bound money transfer services is being launched to provide an alternative channel of foreign exchange transfer to serve the needs of small foreign exchange end users "Simultaneously, it reduces the foreign exchange sourced from official foreign exchange window in Nigeria and to a large extent, helps to conserve our foreign exchange".

In his words: "A prospective customer, who wished to use the service, would only pay the Naira equivalent to the money transfer operators for the foeign currency that would be paid to the specified beneficiary abroad, This will end the idea of going to the Bureau de change or banks to buy foreign currency before transferring money abroad.

"If you need to make payment to your children, brothers and sisters living abroad that need small financial support, all you need to do is to take your cash to any of the 5,000 western union outlets in Nigeria, we are working very hard to ensure that the number of outlets increases further from 5,000, we have also agreed with Western Union about the need for them to work with Bureau de Change (BDC) operators that are well structured".

The CBN boss explained that the outbound transfer service would only be conducted by international money transfer service operators stressing that the banks and the BDCs that met the new CBN requirements would serve as agents for money transfer service. He stated that bank accounts were not required to transfer funds and that transaction points would be within the reach of customers.

"We will allow cash, but going forward, we will discuss with operators of mobile telephones so that those on the mobile payment platform can transfer money from their accounts via western union to anybody abroad, these are some of the efforts we are making because we are embracing cashless transactions," he added.

A statement by Money Gram on the issue equally said: "The MoneyGram Outbound Service, which will reinforce the well-known MoneyGram "received and send money in 10 minutes" brand promise, is expected to lead to greater convenience and ease as customers will be able to access in the majority of MG location, through their partner banks.

MoneyGram is offered through respected financial institutions in Nigeria including EcoBank, UBA, First Bank, Access Bank, sterling Bank Fidelity Bank, Skye-Bank, KeyStone Bank, Enterprise Bank, Mainstreet Bank, diamond Bank and Wema Bank just to mention few.

Speaking at the launch of the "Naija Sends", an outbound money transfer Service by MoneyGram and UBA Plc, Regional Manager, Anglophone West Africa, MoneyGram, Mrs. Kemi Okusanya, said that the launch of "Naija Sends' has further deepened the brand's reach and service in Nigeria.

However, some of its limitations are that such cannot be used by a business organization in Nigeria to send money to another organization abroad.

Okusanya stated: "Over the last two decades, MoneyGram has facilitated over 15 million transactions in Nigeria, enabling safe, convenient and reliable transfer of funds from the Nigeria Diaspora to their loved ones. As Africa's largest economy, with over 10 million migrants, we are glad we are now able to also offer Nigerians the opportunity to send money abroad to their loved ones and for business transactions"

Also at the event, the UBA's Group Managing Director/Chief Executive, Philips Oduoza, said that the new UBA and MoneyGram outbound money transfer service will boost trade and business among African countries as many Nigerians who do business across the continent no longer have to move around with cash as they can easily transfer money to their business partners in Africa, in China, Europe and America to pay for goods and services bought.

source:Guardian News.