Opening the International Money Transfer Space – Thisday

The foreign exchange market has in recent times been facing challenges. The naira has lost so much of its value on the parallel market. Also, the gap between the official exchange rate and the parallel market has continued to widen.

The situation was a result of decline of the price of Nigeria’s major source of foreign exchange earner, crude oil, at the international market.
In trying to stem the tide, the Central Bank of Nigeria (CBN) had adopted measures to reduce the rate of foreign exchange outflow from the external reserves.

From the exemption of 41 items from the list of eligible items for foreign exchange, the reduction of the withdrawal limits on payment cards outside the country, among others, the central bank has shown its determination to stabilise the exchange rate.

Experts have however suggested that the solution to the perennial crisis in the foreign exchange market is to enhance inflows through increased export earnings, foreign direct investments and diaspora inflows.

Of all these three sources, diaspora inflows appear the most readily available source the country can harness to solve the macro-economic challenges posed by foreign exchange shortfall. This is because remittances are the second largest source of foreign exchange in Nigeria after the oil sector.

In 2015, an estimated $21billion flowed into the country, including $5.7billion sent from the United States and about $3.7billion from the United Kingdom.