The Nigerian diaspora is anywhere between 5 to 15 million covering practically every part of the globe, the largest concentrations however being in the UK, USA and South Africa and the need to send money to Nigeria online is vital.
In recent times, this emigration has come at a cost to Nigeria because of the brain drain, though the diaspora has grown in strength. A significant part of which is well educated and trained to hold professional jobs that command high median income levels. As with other diaspora groups, they maintain strong familial bonds and influence the social, political and economic development of Nigeria. In the US, Nigerians are the most educated ethnic group. With an average household income of $94030 (2012 US census), their contribution to the Nigerian economy equals oil revenues.
In 2018, remittances stood at $25 billion as per PricewaterhouseCoopers audit firm’s report as compared to US$26.1 billion in oil revenues (economic report released by the Central Bank of Nigeria)
The Central Bank of Nigeria pulled the shutters down on IMTOs…
because of, they maintain, the unwholesome activities of unlicensed operators. However FAZRemit is ideal for money transfer to Nigeria from US. FAZRemit is secure, fast, legal and affordable.
The move to disallow other money transfer operators (save 3 or 4) as illegal, restricting one’s ability to send money to Nigeria online and throttling the movement of legal money has far-reaching consequences. But first, what precipitated such a move by the Central Bank of Nigeria?
Money transfer operators have had a boom in Nigeria and most of them sell inward foreign exchange in the Lagos Parallel Market (Open Market) though it is legally binding to surrender the foreign exchange to the Central Bank in exchange for Nairas. The credit to the beneficiary’s account is through a local deposit.
The Central Bank’s foreign exchange reserves regarding overseas remittances remain stagnant. This triggers the Parallel market in appreciating foreign currencies against the Naira. Cause and effect; the official rate vis-a-vis the Lagos Parallel Market rate is markedly lower.
The competition is crying wolf. Control measures have been enforced by The Governor of the Central Bank of Nigeria.
The offshoot of all these control mechanisms that have been set in place, is the inevitable backdoor hacking of the system by MTOs to their advantage. A sender can get 400 Nairas for a US dollars, whereas the official rate is near 360 Nairas (NGN). A sender may not care whether it is an official or regulated channel. Their interest is simply put, the biggest bang for the buck. But it is the duty of regulated institutions and online money transfer services like FAZRemit to encourage individuals to do the right thing for money transfer to Nigeria from US.
What is De-banking/ De-risking
Namely, the arbitrary measure of essentially shutting down operations of all other MTOs is de-banking. Consider one fine sunny day, you get a call from your bank telling you that they have put a closure on all their relations with you. Still reeling, you manage the question, but why? You are told that being a private concern it is their prerogative not to assign any reason. Period.
Also the escalation of severing business relationships with remittance companies and small local banks by Global financial players is a key. The driving forces behind this are profit/loss balance-sheet and AML/CFT risks.
The Risks of De-Risking
De-risking puts both legitimate bank customers and licensed IMTOs at risk. Instances run into millions, where banks use AML/CFT laws to ban multiple remittance accounts. Blocking a legitimate process to send money online to a consumer, it is obvious that because of the extreme de-risking laws, the consumer would either have to opt for less secure or even illegitimate channels for the same.
Remit customers, who are in genuine need of decent service, end up getting a push to such platforms which do not have an adequate AML/CFT clearance. This results in a far worse scenario for the vigilance authorities, thus plunging the entire process into jeopardy. Therefore it is important that the institutions promote and conduct strict but convenient KYC verification. Similarly, for companies and business transactions to Nigeria from USA, FAZRemit goes further by performing automated KYCB, KYCC and KYCCB verifications.
There is a legitimate reason why banks are against IMTOs. Yes, risk is a huge factor for the audience and a PR nightmare. But the primary reason is – IMTOs are direct competitors of banks. And, until money transfer services do not upgrade their security level, the same allegations will haunt them. At the same time, it’s not just the business but the consumers who would also suffer.
Therefore, to navigate safely through, to send money to Nigeria online, it is sound advice for expats to go for FAZRemit.