For decades, diaspora remittances have served as a primary financial lifeline for millions of households in Nigeria and a steady contributor to the country’s external reserves.
However, the system for receiving these inflows has evolved. The most recent and arguably most consequential change is the Central Bank of Nigeria’s (CBN) directive requiring all International Money Transfer Operators (IMTOs) to disburse inbound remittances strictly in Naira.
This policy marks a departure from previous years where beneficiaries often had the choice to receive US Dollars (USD) in cash or into domiciliary accounts.
In examining the technical requirements, the economic rationale, and the implications for both operators and citizens, we can better understand how this Naira-Only policy fits into ongoing reforms of Nigeria’s foreign exchange framework.
The CBN, in its circular, noted the aim to improve diaspora remittance flows, strengthening transparency, enhancing traceability, and ensuring effective monitoring of transactions.
The central bank directed IMTOs to open and operate Naira settlement accounts and route all transactions through designated accounts held with Authorised Dealer Banks (ADBs) in Nigeria.
According to the circular, all transactions arising from international money transfer operations, including disbursements to beneficiaries and related settlements, must be processed exclusively through these settlement accounts.
IMTOs are permitted to maintain accounts with multiple ADBs depending on their operational strategies.
The directive, which takes effect from May 1, 2026, reinforces the CBN’s push to formalise remittance inflows and strengthen a key source of foreign exchange for the economy.
The remittance further explained that settlement accounts shall only be credited with remittance flows and proceeds of foreign exchange conversions carried out by licensed IMTOs or their agents within the Nigerian Foreign Exchange Market (NFEM).
IMTOs are required to properly designate these accounts and notify the CBN’s Trade and Exchange Department, updating the list as necessary.
To support efficiency in the market, Authorised Dealer Banks may process foreign currency transfers from IMTO settlement accounts to other ADBs and approved participants, including licensed Bureau de Change operators.
IMTOs are also expected to reference real-time market prices from Bloomberg BMATCH when pricing transactions, a move designed to improve transparency and price discovery while reducing information gaps between operators and banks.
The Core Mandate: Transitioning to Naira-Only Payouts
In early 2024, the CBN issued revised guidelines that fundamentally altered the operational landscape for IMTOs like Western Union, MoneyGram, and Remitly.
Part of the requirement of this directive is that all inbound money transfers must be paid to beneficiaries in Naira.
Previously, the CBN had experimented with various models, including the “Naira 4 Dollar” scheme which incentivised USD receipts.
However, the current leadership under Governor Olayemi Cardoso has transitioned toward a “willing buyer, willing seller” market model.
Under the new rules, the option to receive foreign currency cash or USD credits to domiciliary accounts for these specific retail transfers has been removed.
Key Technical Provisions for IMTOs
Mandatory Naira Settlement Accounts: As of mid-2024 and extending into 2026 compliance windows, IMTOs are required to open and maintain designated Naira Settlement Accounts with Authorised Dealer Banks (ADBs) in Nigeria.
Restricted Inbound-Only Focus: IMTOs are now strictly limited to facilitating inbound transfers. Outbound transactions (sending money from Nigeria to other countries) are generally prohibited for these operators, concentrating their efforts solely on bringing liquidity into the country.
Prohibition of Fintechs as Primary IMTOs: One of the more controversial aspects of the 2024 guidelines was the exclusion of fintech companies and Deposit Money Banks (DMBs) from holding primary IMTO licenses, though they are still permitted to act as agents for licensed operators.
Price Discovery and the Bloomberg BMatch Standard
A common concern with local currency payouts is the exchange rate. To prevent the exploitation of beneficiaries and to reduce the gap between official and parallel market rates, the CBN introduced a transparent pricing mechanism.
IMTOs are no longer allowed to set arbitrary rates. Instead, they are directed to benchmark their transactions against real-time market prices.
Specifically, the CBN has mandated the use of the Bloomberg BMatch platform as a reference. This ensures that the rate a customer receives money is reflective of the current market reality in the Nigerian Foreign Exchange Market (NFEM).
By removing the allowable limit (which previously capped rates within a small percentage of the previous day’s close), the CBN has effectively allowed the Naira to find its value based on actual demand and supply.
This transparency is intended to discourage round-tripping, the practice of diverting foreign exchange to the black market for a higher profit, and to ensure that the official channels remain competitive with informal ones.
The Economic Rationale: Why Now?
The push for a Naira-only policy is not merely an administrative preference; it is a strategic attempt to solve a liquidity crisis. Nigeria’s foreign reserves have faced immense pressure due to fluctuating oil prices and a high demand for imports.
1. Enhancing Traceability and Transparency
When remittances are paid out in USD cash, the funds often disappear into the informal economy or the parallel market (the black market).
By forcing these transactions into the Naira-denominated banking system, the CBN gains better visibility into the volume of foreign currency entering the country.
Every dollar sent from abroad must now be sold to the official market (the IMTO or its agent bank) before the equivalent Naira is paid to the recipient.
2. Boosting Official FX Liquidity
Under this policy, the foreign currency sent by the diaspora remains at the gateway, held by the Authorised Dealer Banks or the CBN.
This foreign exchange can then be utilised to fund critical imports, pay off external debts, or stabilise the currency.
It effectively channels billions of dollars annually directly into the official coffers rather than letting it circulate in unregulated street markets.
3. Strengthening Monetary Policy Transmission
When a large portion of the economy operates using physical foreign currency, the central bank loses its ability to control the money supply effectively.
By ensuring that retail transactions are settled in the local currency, the CBN regains a measure of control over the Naira’s velocity and inflationary pressures.
Impact on Beneficiaries and the Diaspora
For the average Nigerian, the shift has been met with mixed emotions. During periods of high Naira volatility, many preferred holding USD as a hedge against inflation. However, the new policy provides a counter-benefit: Ease of Access.
Recipients no longer need to find a Bureau de Change (BDC) to convert their USD into Naira for daily expenses. The funds are delivered directly into their bank accounts or can be picked up as Naira cash.
Furthermore, because IMTOs are now forced to use market-reflective rates, the loss that beneficiaries used to take by using official channels (which often had much lower rates than the street) has been significantly narrowed.
Note on Cash Limits: For those who still prefer physical cash, the CBN has set limits. While bank transfers are encouraged, cash payouts in Naira are permitted, though large transactions (typically exceeding the equivalent of $200) are mandated to be paid directly into a bank account to align with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) protocols.
Compliance and Sanctions
To ensure that IMTOs do not find backdoors to pay in USD or use unauthorised rates, the CBN has stepped up its oversight. Operators are required to file daily, weekly, and monthly returns.
Failure to comply can result in: revocation of operating licenses, heavy financial penalties and suspension from the settlement system.
As of early 2026, the CBN has reiterated that any IMTO found paying in foreign currency or bypassing the designated Naira settlement accounts will face immediate sanctions.
This zero-tolerance approach is designed to eliminate the arbitrage opportunities that previously made it more profitable for operators to divert funds away from the official system.
Looking Ahead: The Future of Nigerian Remittances
The success of the Naira-only policy depends heavily on the stability of the Naira itself. If the gap between the official market and the parallel market remains small, the diaspora will continue to use official IMTOs.
However, if the Naira devalues rapidly and the official rate lags, there is a risk that senders will return to an informal method of money transfer.
The CBN’s strategy is a high-stakes bet on market liberalisation. By forcing all formal remittances through a single, Naira-denominated funnel, the government hopes to create a self-sustaining cycle of liquidity that eventually stabilises the currency for the long term.
