In a move that will have an impact on Nigerian diaspora inflows the Central Bank of Nigeria (CBN) recently passed regulations that prevent the majority of money transfer operators (MTOs) from providing services in the country.
A number of MTOs that include startups like WorldRemit were instructed by their local affiliates that all transfers to the West African country wouldn’t be processed anymore.
Though no reason for the decision has been offered it seems to have been motivated in part by a memorandum from the Central Bank released in 2015 which set stringent conditions for operating a mobile money service such as a net asset value of US$1 billion for all MTOs as well as having been operational for at least 10 years.
With the new regulations only three MTOs, Western Union, MoneyGram and Ria, have been allowed to offer to services.
WorldRemit, one of the more active MTOs in Nigeria and the rest of Africa has been very critical of the decision. Its own service handles 40,000 money transfers into Nigeria, contributing to the country’s $21 billion remittances market.
Such a huge pie has attracted a number of new MTAs so perhaps this might be Nigeria’s regulatory approach to weed out services that could be unable to meet the demands of honouring all inflows.
However, the same response could have also locked out some genuine operators and inadvertently created an exclusionary environment that doesn’t benefit the consumers in the long term.