Nigeria to offer naira incentives for importing dollars

ABUJA (Reuters) - Nigeria will offer a naira incentive to import U.S. dollars through certain licensed channels, the central bank said, in a push to shore up the country’s dollar supply.

Recipients of remittances from the Nigerian diaspora made through international money transfer operators licensed by the central bank will receive 5 naira ($0.0131) for every imported dollar, the regulator said in a statement dated Friday and sent on Saturday.

The scheme will run from March 8 to May 8, the bank said.

Nigeria in November changed the currency of remittance payments to the U.S. dollar from naira, after the currency fell to a 3-1/2 year low of 500 naira to the dollar on the black market.

The bank said the change was to narrow the arbitrage whereby money transfer operators profited from unofficial channels.

Rising dollar demand has been putting pressure on the naira. Importers have scrambled for hard currency, while providers of foreign exchange, such as offshore investors, exited after the COVID-19 pandemic triggered an oil price crash.

Remittances or money transfers make up the second-largest source of foreign exchange receipts after oil revenues in Nigeria, Africa’s biggest economy. Around $26.4 billion was sent to Nigeria in 2019, according to the World Bank.

($1 = 380.5500 naira)

Reporting by Camillus Eboh; Writing by Paul Carsten; Editing by Catherine Evans