47 IMTOs get approval to operate in Nigeria

• Official, parallel market FX differential widens

The Central Bank of Nigeria (CBN) has approved 47 companies to operate as international money transfer operators (IMTOs), an effort interpreted as a move towards breaking the historical dominance of the industry cartel and liberalising the market.

A document released by the apex bank, yesterday, said the 47 firms, comprising 17 local and 30 foreign-based companies, are the approved market operators as of February 28, 2021.

Stakeholders had called for the liberalisation of the market to crash the fees on transfers to Nigeria, which is the costliest destination alongside other Sub-Sahara African countries to send money.

The market was hitherto controlled by Western Union and MoneyGram with Ria Financial on the fridge. The three players had acted in collusion to set the condition of service to the detriment of the industry. Stakeholders, including the CBN’s governor, Godwin Emefiele, accused the operators of anti-market activities.

Emefiele, at a meeting with the players and their agents (banks) on the enforcement of its new directives on remittances, said the IMTOs were feasting on the exchange rate arbitrage while doing nothing to increase remittance inflows.

The Association of Bureaux De Change Operators of Nigeria (ABCON) and a few other organisations had rolled out series of campaigns against the oligopolistic structure of the market, how it pushes Nigerians in the diaspora to black market operators and called for adequate checks and, most importantly, the listing of new players.

The industry began to get sufficient attention from many newcomers in recent years, with unregistered players actually taking a bite of the local market.

The Central Bank, last year, had to issue a statement warning that Azimo and Transfer Wise, who was cashing in on the huge opportunities in Nigeria’s money transfer market, had not been registered to operate.

Azimo, a United Kingdom-based firm, is among the new additions to the existing money transfer merchants. The foreign firms now have a collection of 17 local operators located majorly in Lagos and Abuja to compete with.

The emerging new competition, which kicked off in earnest over a year ago, is expected to drive down the cost of transfer and pull more forex from the informal channels and boost liquidity.

Notwithstanding the recent efforts to increase forex liquidity, the naira faces renewed pressure at the parallel market. At the weekend, the local currency retreated to between N486/$ to N495/$ in Lagos, Abuja, and Port Harcourt, Rivers State.

As the value of the naira falls at the alternative market, it remains firm at about N410/$ at the investors’ and exporters’ (I & E) window. This is pushing up the already wide differential between the two markets, a problem said to be responsible for round-tripping, ‘under-the-table’ deals, and other manipulations rife in the currency market.