Barely 18 months after it was introduced by the Central Bank of Nigeria (CBN), the Naira4Dollar Scheme seems promising. In 2021, the scheme recorded total remittances of about $2.9billion. However, it has raked in $2.4billion in the first eight months of this year alone, thereby raising hopes that, other things being equal, remittances by year-end would surpass that of last year.
CBN’s Director of Trade and Exchange Department, Dr Ozoemena Nnaji, who made the figures public at the 33rd Seminar for Finance Correspondents and Business Editors with the theme, “Policy Options for Economic Diversification: Thinking Outside the Crude Oil-Box,” organised by the CBN, noted that inflow through the scheme had been strong.
“In 2021, we were able to record $2.9 billion of cash inflows, so far this year, we have recorded $2.4 billion. So, in half of the year, we have gotten almost what we got in the year 2021”, she said. Nnaji shed more light on the remittances: “We have a component of remittances which include workers’ compensation, anyone that worked in Nigeria, even if you are a Nigerian but are paid in dollars because you work for an embassy or an international organisation, it is counted as a remittance.”
The CBN introduced the scheme in March, 2021, to encourage remittance inflows from the diaspora. It entails the giving of N5 bonus for every one dollar remitted, to serve as an incentive for both senders and recipients of money transfers. It was also designed to enhance the supply of forex and consequently ease pressure on the foreign exchange market. Initially, it was to terminate two months after; that is on May 8, 2021. Perhaps the promise that it showed made the apex bank to extend the deadline indefinitely.
Although the idea is not novel in that some countries like Pakistan, for example, have since embraced it and are reaping bountifully from the scheme, we nonetheless commend the CBN for introducing the Naira4Dollar Scheme. As they say, it is better late than never. It is the duty of every apex bank to think out of the box even before their respective countries run into forex problems.
We acknowledge the effects of the coronavirus pandemic and the attendant global economic downturn on diaspora remittances. For example, during COVID-19, diaspora remittances averaged six million dollars a week; this jumped to over $100 million a week as at March 2022, with prospects of further increase as the global economy improves. Indeed, things would have been better but for the Russia/Ukraine war.
However, now that the CBN has extended the scheme indefinitely, it should seek ways of improving on it to fetch more foreign exchange for the country. As Uche Uwaleke, a Professor of Economics and Capital Market, suggested, the apex bank should copy the Pakistani model of the scheme to increase its benefits and improve remittances into Nigeria. The Pakistani model entails a loyalty reward scheme that encourages remittances to benefit from participating companies. “It should be improved upon to increase remittances. In Pakistan for example, it has increased remittances from $11 billion to $24 billion. So, we can improve if we tinker with the current Naira4Dollar scheme,” Uwaleke noted.
It is gratifying that the CBN is not only thinking in this direction but has met with the Pakistani monetary authority with a view to seeing how Nigeria could expand the scope of the scheme to fetch it more forex. We urge the apex bank to facilitate work in this regard.
Even then, the point must be made that it is a reflection of bad governance that makes locals wait on their people abroad to take care of their immediate needs. There is nothing wrong in getting remittances from abroad because no country is an island. Countries must somehow depend on one another these days. But relocating abroad should be by choice. Going for greener pastures abroad should not be due to hardship and shrinking opportunities as we have in Nigeria.
So, the relevant authorities in the country have to take governance more seriously. More attention should be paid to social and other infrastructure. Unemployment must be tackled frontally even as measures must be devised to take the economy out of the doldrums. Insecurity is another critical area that the government must face squarely. No investor would risk coming into a country where the safety of his investments cannot be guaranteed. Nigeria needs all the forex it can muster to redeem its economy and make life more meaningful for the people through diaspora remittances. But that should be with excess capacity as in the case of India, and not at the expense of skilled manpower which is not even adequate, and which the country itself sorely needs.