Reported by: Ijeoma G | Edited by: Oravbiere Osayomore Promise.
In a significant shift in Nigeria’s foreign exchange and remittance policy, the Central Bank of Nigeria has ordered all international money transfer operators to open naira settlement accounts and route all diaspora remittance transactions through these accounts, effectively ending the practice of direct dollar payouts to beneficiaries in Nigeria.
The directive, which takes effect from May 1, 2026, requires international money transfer operators, including formal remittance firms and banks that handle cross‑border transfers, to maintain dedicated naira settlement accounts with authorised commercial banks in Nigeria. Under the new system, all inbound remittances must be settled in naira through these accounts before funds are credited to recipients, replacing the former practice where beneficiaries could receive U.S. dollars directly or have funds paid into dollar‑denominated accounts.
The central bank’s policy aims to enhance traceability and transparency of remittance flows into the country, ensure that foreign exchange inflows are captured within the official market, and improve overall liquidity in the foreign exchange system. Authorities believe that channeling remittances through the formal naira settlement mechanism will reduce informal forex activities and curb distortions that have historically undermined official exchange rates.
Nigeria is one of Sub‑Saharan Africa’s largest recipients of remittances, with billions of dollars sent annually by Nigerians living overseas to support households, businesses, and investment activities back home. While remittances have long been a stable source of foreign exchange for the economy, much of that flow previously occurred outside strict regulatory visibility when beneficiaries opted to receive funds in U.S. dollars.
Under the new framework, international money transfer operators must notify the central bank of all designated naira settlement accounts and ensure that all remittance transactions pass through these accounts. The arrangement also requires operators to align their pricing with real‑time exchange rates determined by official market benchmarks, aiming to bring greater discipline to pricing practices and encourage competition in the remittance space.
The move is part of a broader set of reforms by the central bank intended to stabilise the foreign exchange market, reduce dependency on parallel market rates, and strengthen the role of the naira in international transactions. Regulators have been implementing measures over recent years to unify multiple FX windows, improve transparency, and integrate more market‑driven pricing mechanisms.
For Nigerians receiving remittances, the immediate impact will be that funds sent from abroad will be converted to naira at prevailing official exchange rates before payout. While this could result in variations from rates quoted in informal markets, authorities maintain that the policy will protect receivers from volatility and ensure that remittance inflows support broader economic objectives.
Financial industry stakeholders have been preparing for the transition, updating systems and processes to comply with the directive. Some operators have raised concerns about operational adjustments, particularly smaller firms that will need to align legacy systems with the new settlement requirements. Nevertheless, the central bank has emphasised that robust monitoring and strict compliance are central to the success of the initiative.
The policy is also expected to strengthen reporting and data collection on remittance volumes, enabling the central bank and economic planners to gain clearer insights into external financial flows. Better data, regulators argue, will improve forecasting and decision‑making in monetary policy and foreign exchange management.
Economists have described the directive as a milestone in Nigeria’s efforts to formalise financial inflows and enhance the effectiveness of monetary policy. By ensuring that remittances are settled within the regulated financial system and denominated in naira, the central bank anticipates stronger oversight of foreign exchange dynamics and reduced reliance on unofficial channels.
However, some experts caution that the success of the reform will depend on how efficiently remittance operators can implement the changes and how well the official market responds to increased liquidity. If properly executed, the shift could make Nigeria more resilient to external shocks and improve the competitiveness of its financial sector.
As the implementation date approaches, remittance operators and banks are expected to finalise processes, engage customers on the changes, and ensure that systems are ready to support the new settlement regime. For remittance beneficiaries, understanding the implications of naira‑based payouts and staying informed about prevailing exchange rates will be essential in adapting to the new policy environment.
The central bank’s directive underscores its commitment to deepening the role of the naira in the economy while enhancing transparency, market integrity, and long‑term stability in the foreign exchange system.
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