By Paul Chimodo
The Central Bank of Nigeria (CBN) is preparing to reshape the way diaspora remittances are paid into the country, introducing a policy that will end the payout of foreign currency to recipients.
From May 1, 2026, all international money transfers into Nigeria will be disbursed strictly in naira. This means Nigerians receiving funds from abroad will no longer collect dollars or any other foreign currency through licensed International Money Transfer Operators (IMTOs) such as Western Union, MoneyGram, and similar platforms.
Under the new system, all remittance inflows will be routed through official banking channels, converted at prevailing exchange rates, and paid out in naira directly into beneficiaries’ accounts or through approved payout options. This effectively removes any form of foreign currency cash collection linked to remittance inflows.
The CBN says the decision is aimed at strengthening oversight of foreign exchange flows and improving transparency in how remittances enter the economy. The regulator also believes the move will help reduce pressure on the foreign exchange market and ensure that all dollar inflows are fully captured within formal financial systems.
Nigeria remains one of the largest recipients of diaspora remittances in Africa, with inflows running into billions of dollars annually. These funds play a significant role in supporting household consumption, education, healthcare, and other essential needs across the country.
However, the central bank has raised concerns that previous payout structures created room for inefficiencies and arbitrage between official and parallel market exchange rates. By centralising all conversions, the new policy seeks to close those gaps and bring more stability to rate discovery.
For recipients, the change is straightforward but significant. Funds sent from abroad will now be converted before they are received, meaning households will have no control over timing or access to foreign currency. Instead, they will receive naira based on the official rate applicable at the time of processing.
This shift is expected to have direct implications for many families who rely on remittances for daily living expenses. The value of inflows will now be tied strictly to official exchange mechanisms, removing the possibility of benefiting from alternative market rates that previously existed in informal channels.
The policy also affects the wider remittance ecosystem, including fintech companies, licensed IMTOs, and Bureau de Change operators. While major operators are expected to comply with the new framework, smaller players may need to adjust their business models as foreign currency payout structures are phased out.
In broader terms, the move reflects a continued push by the CBN to unify Nigeria’s fragmented foreign exchange system. By ensuring that all remittance inflows pass through regulated channels, the central bank aims to improve visibility of dollar supply, strengthen liquidity management, and reduce speculative activity in the FX market.
Still, questions remain about how households and market participants will adapt once implementation begins. The effectiveness of the policy will likely depend on compliance levels, market confidence, and how quickly the formal system absorbs the full volume of remittance flows.
