Recently, the Central Bank of Nigeria (CBN) introduced the Naira 4 Dollar scheme to boost remittances from Nigerians in the Diaspora.
Through the scheme, the apex bank noted that for every $1 dollar remitted from the Diaspora, the recipient, in Nigeria, would receive N5.
The circular read in part, “The CBN shall, through commercial banks pay to remittance recipients the incentive of N5 for every $1 remitted by sender and collected by designated beneficiary,” the circular stated.
“This incentive is to be paid to recipients whether they prefer to collect the USD as cash across the counter in the bank or transfer same into their domiciliary account.”
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Similarity To Bangladesh’s Scheme
In 2019, the government of Bangladesh introduced a scheme that would incentivise the expatriate community.
The incentive scheme was part of the country’s government to encourage “more foreign remittance into the country”, as reported by xpressmoney.
Every money received by citizens of Bangladesh from the Diaspora attracts a 2 percent incentive.
The government noted that the incentive will only apply to those who received money through legal remittance channels.
For remittances up to BDT 150,000 (USD$1,768), no documentation is required, and the 2 percent incentive will be added to the transferred funds directly.
For funds above BDT 150,000 (USD$1,768), documentation is required at local banks.
Between the months of July and November 2020, remittance in the country rose to $10.90 billion, representing some 41.32 percent year-on-year.
The scheme reflected positively on the country’s foreign exchange reserve, rising from $31.72 billion in 2020 to $41.18 billion in 2020.
Nigeria’s Model
Although, the CBN hasn’t clearly defined the workings of the newly-introduced scheme, the success of the initiative remains to be seen, as the success of the initiative depends on Nigerians in the Diaspora and the volume of their remittances hinged on the attractiveness of the model.
