CBN Records $276m Decline in IMTO Inflows

The Central Bank of Nigeria has reported a significant drop of $276 million in foreign exchange inflows from International Money Transfer Operators, reflecting ongoing pressures in Nigeria’s external sector despite recent reforms aimed at boosting foreign currency supply.

According to the apex bank, IMTO inflows declined within the latest reporting period compared with the preceding cycle, underscoring persistent challenges affecting remittance flows into the country. Remittances from Nigerians in the diaspora have historically been a major source of foreign exchange, supporting household consumption, balance of payments stability and liquidity in the foreign exchange market.

The CBN explained that the decline occurred despite policy measures introduced to liberalise the foreign exchange market and encourage inflows through official channels. The bank noted that global economic uncertainties, rising living costs abroad and changes in migration income patterns have combined to affect the volume of funds sent home.

IMTO inflows are considered a critical component of Nigeria’s foreign exchange earnings, often rivaling oil revenue in terms of stability. Analysts note that sustained declines in remittances could complicate efforts by monetary authorities to stabilise the naira and rebuild external reserves.

The apex bank pointed out that exchange rate volatility during the period under review may have influenced remittance behaviour. Some diaspora Nigerians reportedly adopted a wait-and-see approach, delaying transfers amid uncertainty over currency valuation and market direction.

The CBN also acknowledged that informal remittance channels continue to divert flows away from official systems, despite regulatory efforts to curb such practices. Unofficial channels often offer perceived advantages, including flexible rates and faster settlements, which can undermine formal IMTO inflows.

In response, the CBN reiterated its commitment to strengthening the formal remittance ecosystem. The bank highlighted recent policy adjustments that allow IMTOs greater operational flexibility while ensuring compliance with anti-money laundering and counter-terrorism financing regulations.

The apex bank stressed that improving transparency and efficiency in the foreign exchange market remains a priority. It noted that confidence is a key driver of remittance inflows, and sustained policy consistency is necessary to attract funds through authorised channels.

Economic analysts say the $276 million decline reflects broader structural and global factors rather than a single domestic issue. Rising inflation in advanced economies has reduced disposable income for many Nigerians abroad, limiting their capacity to remit funds at previous levels.

In addition, changes in employment patterns, particularly in sectors heavily populated by migrant workers, have affected earnings. Analysts also point to stricter financial regulations in some host countries, which may slow down cross-border transfers.

Despite the decline, the CBN maintained that overall remittance flows remain substantial and continue to play a stabilising role in the economy. The bank expressed optimism that ongoing reforms would gradually reverse the downward trend.

The apex bank cited improvements in digital payment infrastructure and expanded IMTO participation as part of efforts to make formal channels more attractive. It also emphasised collaboration with financial institutions to enhance customer experience and reduce transaction costs.

Stakeholders in the financial sector have urged the CBN to further incentivise diaspora remittances through targeted products and services. Suggestions include foreign currency-denominated savings instruments, investment opportunities and preferential exchange arrangements tied to official inflows.

The decline in IMTO inflows comes at a time when Nigeria is seeking to diversify foreign exchange sources amid fluctuating oil revenues. With crude oil earnings exposed to global price swings and production challenges, remittances are increasingly viewed as a buffer against external shocks.

Manufacturers and import-dependent businesses have expressed concern that reduced remittance inflows could tighten foreign exchange liquidity, potentially affecting access to dollars and increasing pressure on the naira. However, some analysts believe recent improvements in market transparency could mitigate severe impacts.

The CBN has continued to assure market participants that it is monitoring inflow trends closely and adjusting policies where necessary. The bank reiterated that its goal is to create a stable, market-driven foreign exchange environment that encourages sustainable inflows.

Observers note that restoring confidence among diaspora Nigerians will be critical. Consistent policy implementation, predictable exchange rate management and efficient banking services are seen as key factors in attracting higher remittance volumes.

The apex bank also highlighted the role of financial literacy and awareness, noting that some Nigerians abroad remain unaware of improved official remittance options. Increased engagement with diaspora communities, the CBN said, could help address misconceptions and encourage formal transfers.

While the reported $276 million drop signals ongoing challenges, experts believe the situation is not irreversible. They argue that as macroeconomic conditions stabilise and reforms take deeper root, remittance inflows could rebound over time.

As Nigeria continues its broader economic reform agenda, the performance of IMTO inflows will remain a key indicator of external confidence and financial stability. For now, the CBN’s latest figures highlight the need for sustained efforts to strengthen the country’s foreign exchange inflow channels and reassure diaspora contributors.