Hundreds of global remittance companies forced to cease transfers as Nigeria’s central bank, CBN suspends money transfers to Nigeria.
Only Western Union, MoneyGram and Ria are allowed continue.
In a statement made available to Elombah.com, WorldRemit, a leading online remittance provider, 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.
WorldRemit sends more than 40,000 money transfers to Nigeria every month.
Nigeria received more than $20bn in remittances annual from migrants around the world.
Only three companies – Western Union, MoneyGram and Ria – will be able to continue operations, following an extreme and unexpected move by the Central Bank of Nigeria.
WorldRemit, in common with all other international MTOs, 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.
No reason was given for the new policy which comes as the naira dropped to 382 against the United States dollar at the parallel market on Monday, down from the 380 it closed on Friday.
Nigerians in diaspora unable to transfer monies to Nigeria on Wednesday lamented their predicament as all the money transfer companies close shop.
In a text message to their customers, Provider Services a private money transfer company based in the United Kingdom said they received a circular issued by CBN a few minute ago freezing all money transfer accounts in Nigeria.
“Customers are advised not to pay into our account until further notice”, the company stated.
The naira has been under a persistent pressure as dollar scarcity continues to weigh on the local currency at both the parallel and interbank forex markets.
The local currency had hovered between 375 and 380 against the greenback last week.
Economic and financial experts said inadequate forex liquidity at the interbank market was taking a toll on the parallel market.
Analysts had predicted that the naira would weaken further against the dollar this week owing to limited dollar supply as foreign portfolio investors continued to stay on the sidelines until the Nigerian economy showed signs of recovering from the impact of currency controls
The naira had hit an all-time interbank low of 334.50 per dollar on Wednesday, a day after the Central Bank of Nigeria hiked interest rates to try to lure foreign investors back into local assets.
On Monday, the naira closed at 316.37 against the dollar at the interbank market. On Friday, it closed at 321.16 to the dollar, compared to 292.40 the previous Friday.
On recent moves to ban transfers to the country, Worlremit stated: “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% 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 has 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 $1bn and have been operating for more than 10 years.
WorldRemit is the world leader in transfers to Mobile Money accounts and had been planning to launch remittances to Mobile Money services in Nigeria.
“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,” said Ismail Ahmed.