IMTOs and The CBN
Since I will be using IMTOs throughout this article, a perfect way to start will be to write out the full stretch of IMTOs. It means International Monetary Transaction Operators.
IMTOs carry out cross-border fund transfer services for individuals and entities residing abroad to recipients in Nigeria.
The image below consist of the first 28 operators arranged in alphabetical order.
There was a circular circulated and signed by its Acting Director of Trade and Exchange Department stating some measures and announced that they will take effect immediately.
In a bid to increase the dollar supply in Nigeria’s foreign exchange market and further stabilize the value of naira, the Central Bank of Nigeria (CBN) has announced measures to ensure eligible International Money Transfer Operators (IMTOs) have access to naira liquidity to settle diaspora remittances.
In April, the CBN issued specific guidelines on IMTO services, including minimum capital requirements and prompt repatriation of export proceeds
Earlier in May, the CBN granted 14 new IMTOs approval in principle (AIP) to double foreign currency remittance inflows through formal channels.
IMTOs would now have direct access to naira liquidity through the CBN’s window via their Authorized Dealer Banks (ADBs) to execute foreign exchange transactions in the market.
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The new regulation has it that transactions executed before noon on a trading date would be settled on the same day and also that pricing on the CBN portal would mirror the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) traded rates, which are based on an acceptable market benchmark.
All IMTOs were required to submit daily regulatory returns to the apex bank which must include all relevant information on the sources of funds.
The CBN by this wants that access is widened to local currency liquidity, ensuring smoother and more efficient settlement processes for remittances.
This will increase remittances. IMTOs provide official channels for Nigerians abroad to send money back home to their families.
These inflows through the IMTOs will boost remittance volumes
By bringing foreign currency into the official market, IMTOs can help the CBN manage the exchange rate and stabilize the Naira.
We should expect financial Inclusion. IMTOs can reach areas where traditional banks may not, providing financial services to a wider range of Nigerians.
This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira.
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