Central Bank of Nigeria moves to digitize the Nigerian Foreign Exchange (FX) market in partnership with Flutterwave, Wema Bank, and BDC in an attempt to stabilize the naira. This is so as the CBN authorized the building and launching of Swap, an app, to help in the digitizing of Nigerian Foreign Exchange market. This is in a bid to limit or stop the FX crisis hitting Nigerian harder now.
On the starting of President Tinubu’s administration, the President hurriedly floated the naira to make it operate according to the free market economy. Speculations had been that it would be stabilize after a while. However, months after the floating of the naira, it is yet to stabilize.
Now, the CBN is putting in a lot of measures and options to see to it that the naira is stabilized in worth and pricing when placed side by side with other foreign currencies, especially the dollar.
Central Bank of Nigeria moves to Digitize the Nigerian Foreign Exchange (FX) Market in Partnership with Flutterwave, Wema Bank, and BDC
With a policy backed by the Central Bank of Nigeria (CBN), Flutterwave has launched Swap in an ttempt to digitise the Nigerian Foreign Exchange (FX) market, in partnership with Wema Bank, the 10th biggest Nigerian bank by assets, and Kadavra BDC.
In detail, Flutterwave has launched Swap, a new product that will digitise the process of getting foreign exchange for Nigerians. The fintech is leveraging a partnership with Wema Bank, a commercial bank, and Kadavra BDC, a bureau de change (BDC), to provide liquidity and foreign exchange for the product.
Mr Folashodun Shonubi, the acting governor of the CBN, told reporters at a press conference last week that Swap could solve two major problems facing Nigeria’s foreign exchange market: the lack of collaboration between institutions and the dependence on cash.
Mr. Folashodun Shonubi said: “No new licenses were issued, and we believe (Swap) will help moderate the rates for the BDCs and at the same time differentiate BDCs from black market transactions.”
Flutterwave will leverage its International Money Transfer Operator license from the CBN to bring in the foreign currency, Kadavra will use its BDC license to sell it, and Wema Bank will support the entire process. Shonubi went on to add that BDCs that refuse to go digital would be phased out of the system as the CBN tries to make the FX market cashless.
“This helps us to differentiate between what is a regulated market, which is a BDC, as opposed to the ones which the central bank does not regulate.” He shared that the apex bank would monitor all transactions on Swap and unregulated foreign transactions would stop, “because of what we’re doing here today.”
The launch of Swap comes a week after the CBN acting governor said the apex bank would clear all FX backlogs within two weeks. While previous attempts to clear the backlog, such as a publicised $3billion AFREXIM loan, have not yielded any results, CBN is keeping its new plans to clear years’ worth of FX backlog close to its chest. A failure to clear these backlogs will keep significant demand flowing to the parallel market and limit the CBN’s ability to offer price stability.
“We understand the FX access challenges individuals and businesses face. Swap is our answer to those pain points, providing a seamless and efficient platform for currency exchange,” said Olugbenga Agboola, the CEO and co-founder of Flutterwave.
Swap is only available on Flutterwave’s web app and for registered Nigerian users. Users can only access dollars, euros, and pounds with the product. Flutterwave will also issue cards from October for Nigerians who require swift access to Personal Travel Allowance (PTA) and Business Travel Allowance (BTA).
Users must pass multiple identity verification phases and submit documentation online before accessing Swap. They would have to submit their bank verification number, a selfie, the reason they want to get FX, and documentation to support their reason. After submitting all the required information, users can input the account numbers they want the money deposited into and get it instantly. Swap will also be available via API for banks.
This is it on Central Bank of Nigeria moves to Digitize the Nigerian Foreign Exchange (FX) Market in Partnership with Flutterwave and BDC. You have to know that this is one of CBN’s policy to stabilize the naira. Will it work? How effective will this policy be, and is it sustainable?
It is only time that will make Nigerians discover how effective the policy will be.
Source: Tech Cabal