UK international money transfer service provider, Wise, formerly known as TransferWise has announced plans to suspend all USD money transfer services to Nigeria effective from November 1st and until further notice.
According to a tweet by @iamDavemarz on Twitter, TransferWise explained in an email that it is because the transaction services have not been extremely “reliable” and “quick,” and this issue requires an adequate solution.
It’s not the first time the money transfer service has had to halt operations in Nigeria. The company also announced in 2020 that it will no longer send remittances to Nigeria after new rules by the country’s apex bank changed the currency of payment to the U.S. dollar from naira.
The reason for this recent announcement is unclear but analysts believe that it could be owing to the recent FX restrictions by the Central Bank of Nigeria which had seen many international companies protest their inability to repatriate funds.
At the same time, rising dollar demand has been putting pressure on the naira. Importers with obligations have scrambled for hard currency, while providers of foreign exchange, such as offshore investors, have exited owing to insecurity, policy somersaults and an unstable political atmosphere.
CBN’s policy effect on TransferWise’s services
Similarly, the fintech company ceased all naira transfers to Nigeria in 2016 due to problems with currency exchange. It had only recently begun operating in Nigeria when this happened.
TechCabal at that time speculated that the decision was owing to the unpredictability of the naira’s value at the time.
In 2020, the Central Bank of Nigeria said that two international services were not licensed to operate as International Money Transfer Organizations in Nigeria: TransferWise and Azimo.
At that time, the CBN also announced a significant reform concerning international money transfers to Nigeria. They authorised beneficiaries of diaspora remittances to receive US dollars into their bank accounts as well as cash withdrawals in dollars under a new policy order to increase foreign currency availability.
The changes in the regulation caused the fintech company, Wise to halt all transactions with Nigeria.
Read also: Nigeria’s diaspora remittances rose 15% to hit $9.3bn in H1 2021, the highest since the pandemic
CBN and Remittance plans
Remittances or money transfers are the second-largest sources of foreign exchange receipts in Africa’s largest economy after oil income.
According to the World Bank, around $26.4 billion was given to Nigeria last year. But, given that this is a significant source of revenue for the country, why are there so many restrictions governing these transactions?
It is possible that the central bank intends to tighten regulations in accordance with the US dollar remittance policy in order to better track all transactions.
To further encourage people, in collaboration with Western Union, the CBN launched the Naira 4 Dollar scheme in 2021, which offers a return incentive on all USD money transfers made to recipients in Nigeria.
The programme is carried out in collaboration with commercial banks in Nigeria and is a part of the bank’s attempts to improve the inflow of remittances from the diaspora into the nation.
Users’ opinion on this Announcement
Users have taken to Twitter to voice their dismay at this latest revelation. While some are still finding their way around international money payment methods, others appear to have overcome these obstacles and embraced the cryptocurrency techniques successfully.
As a nation, Nigeria is hoping it can attract more remittances from its diaspora. But the World Bank expect remittances this year to fall to 2015 levels of $20.2 billion.
This will have a far-reaching impact on the country’s economic outlook for 2023.
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