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- Rohan Pius
Naira settlement mandate reshapes diaspora remittance tax processing through designated accounts and compliance frameworks.
Nigeria's Central Bank has implemented sweeping regulatory changes on remittance tax requiring all international money transfer operators to settle diaspora exclusively in naira marking a significant departure from decades of dollar denominated payment practices. New naira settlement framework transforms remittance operations. Effective May 1, all IMTOs must open designated naira settlement accounts with authorized dealer banks and route all remittance inflows through these accounts.
Recipients will receive payments exclusively in local currency, fundamentally restructuring how diaspora funds enter the Nigerian economy. The directive applies comprehensively to all transactions, including beneficiary payments and related settlements, with operators permitted to designate existing accounts or establish new ones across multiple authorized dealer banks. The Central Bank emphasized that the policy strengthens transparency, traceability, and regulatory oversight within foreign exchange markets while deepening diaspora remittance flows. The remittance policy represents a vital foreign exchange source for Nigeria, supporting household incomes and contributing significantly to external reserves.
Compliance and regulatory requirements strengthen financial integrity. IMTOs must notify the Central Bank's Trade and Exchange Department of all designated settlement accounts and provide updates whenever changes occur. Authorized dealer banks may process foreign currency transfers from IMTO settlement accounts to approved participants, including bureau de change operators, enhancing foreign exchange market liquidity and efficiency.
Through market-based pricing systems, the process for price discovery is improved. The Central Bank implemented a new benchmark pricing guidance for IMTOs that establishes that IMTOs will price foreign exchange transactions at rates that are consistent with real-time prices for the corresponding currencies as determined through the Bloomberg BMatch platform. This pricing methodology is expected to improve price discovery, reduce information disparity, facilitate increased participation in the foreign exchange market, and mitigate distortions that have previously driven transactions into informal channels.
Business Honor views the naira-exclusive remittance settlement mandate as a strategic shift strengthening transparency and market reforms.
About the Author
Rohan Pius is an experienced news writer with extensive expertise across multiple sectors. He combines sharp analytical skills with thorough research to produce clear, insightful reporting on industry trends and their economic impact.
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