Nigeria’s Apex Bank Restricts Access to Transfer Licenses

As part of extensive policy reforms to enhance liquidity in Nigeria’s foreign exchange (FX) market, the Central Bank of Nigeria (CBN) has announced restrictions on banks and fintech startups in conducting international money transfer operations. The apex bank will no longer grant new International Money Transfer Operator (IMTO) licenses to fintech startups, and it has increased the application fees for IMTO approval to N10 million [$6,845].

The revised rules, published on Wednesday, also introduce a minimum operating capital of $1 million for foreign IMTOs and its Naira equivalent for domestic counterparts. The CBN did not provide clarity on how the policy affects fintech companies that previously received permission for international fund transfers. The central bank had previously granted IMTO licenses to fintech firms such as Flutterwave, LemFi, PagaTech, VFD, and Interswitch.

The CBN described the new rules as part of efforts to “liberalise the foreign exchange market and ensure transparency.” Commercial banks are now permitted to act as agents for international money transfer services, according to the revised guidelines. Additionally, the CBN removed the cap on FX transactions, allowing IMTOs to use the prevailing rate at the official market.

The move comes as the CBN implements measures to address liquidity challenges in Nigeria’s volatile FX market and stimulate diaspora remittances and foreign capital inflows. The central bank has instructed banks to limit their FX exposure and sell excess dollars in response to a sharp decline in the official Naira rate against the dollar. Despite a devaluation last year and a decision to float the Naira, the currency has experienced increased volatility as the CBN works to clear a significant backlog estimated at around $5 to $7 billion.

To restore confidence in the FX market, the CBN has been actively addressing the backlog and has reassured the public that it will be cleared “within a short time.” The central bank aims to resolve fundamental issues hindering the effective operation of the Nigerian foreign exchange markets.