Remittances sent through formal channels benefit governments by bringing access to hard currency providing visibility to and assist with the management of the economy.
Nigeria has one of the largest and more complex remittance markets in the world, however, the very large informal segment impedes the potential benefits of these flows being realised by the government.
To address the challenges with informality and specifically the lack of foreign exchange in the country, the Central Bank of Nigeria (CBN) on 30 November 2020 mandated that all remittance transactions from now on must be paid out in US dollars, either in US dollar cash or credited to a US dollar domiciliary account. Previously the legislation had mandated that all international remittances should be paid out in Naira.
It is against this backdrop that the FCDO commissioned a study to investigate the informal remittance market in Nigeria, particularly focusing on the UK to Nigeria corridor. This report further examines the impact of the new directive on remittance receivers, both formal and informal users as well as understanding the impact on market operators.