Introduction
Remittances from Nigerians in the diaspora have become a significant contributor to Nigeria's foreign exchange earnings and Gross Domestic Product ("GDP"). It, therefore, plays an essential role in the Central Bank of Nigeria's ("CBN") strategy to enhance foreign exchange liquidity in the official foreign exchange market and to strengthen the value of the Naira.
According to the World Bank, Nigeria ranked among the largest recipients of remittances in Africa in 2023.1 In a recent press release by the CBN, the CBN reported that personal remittance inflows into Nigeria rose to U$20.93 billion in 2024, reflecting an 8.9% increase year-on-year2. Despite these statistics, a substantial portion of actual foreign currency remittances that should come into the country are not captured. This is because many Nigerians in the diaspora use various digital platforms that transfer the Naira equivalent of the foreign currency to recipients in Nigeria while the actual foreign currency remains outside the country. This practice negatively impacts the actual value of foreign currency remittances that should be brought into Nigeria.
To increase the quantum of remittances to the country, the CBN has consistently introduced policies and measures aimed at boosting remittances and encouraging the flow of foreign currencies through formal avenues. One of such measures is the framework released by the CBN on 10th January 2025 through a circular titled "Introduction of Non-Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account" to which the Framework for the Operation of Non- Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account was enclosed (the "Framework"). This is to further facilitate diaspora remittances to, and investments in the country by non-resident Nigerians. The Framework is geared towards enabling Non-Resident Nigerians ("NRNs") to remit, manage, and invest their foreign earnings in Nigeria in both foreign and local currencies. The Framework came into effect retroactively on 1st January 2025.
This article seeks to highlight the key provisions of the Framework and an analyse its potential benefits and implications for Nigerians in the Diaspora and the Nigerian economy.
Key Highlights of the Framework
(a) Establishment of a Non-Resident Nigerian Ordinary Account
The Framework establishes a Non-Resident Nigerian Ordinary Account ("NRNOA"), which allows NRNs to remit their foreign earnings to Nigeria and manage the funds in both foreign and local currencies. The account accommodates dual currency management, as NRNs can maintain a foreign currency account and/or a local currency account through the NRNOA. The funds to be deposited in the NRNOA must, however, originate from external sources and are to be used to meet personal expenses of the account holder in Nigeria.
The Framework provides that the opening of an NRNOA shall comply with global Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) standards, such as those established by the Financial Action Task Force, to ensure transparency of fund flows while mitigating the risk of fraud and money laundering. In addition, foreign currency deposited in the NRNOA can be freely converted into Naria at the prevailing exchange rates through the authorised dealer whose bank the account is held. Furthermore, interest shall accrue on deposits made in the NRNOA. Such interest earned will, however, be subject to taxes, such as withholding taxes and other taxes as may be applicable.
(b) Establishment of a Non-Resident Nigerian Investment Account
The Framework also establishes another type of account known as the Non-Resident Nigerian Investment Account ("NRNIA"), which offers NRNs the flexibility to invest in assets in Nigeria in either foreign or local currency. Through this account, NRNs can now maintain both a foreign currency account and/or a local currency account to facilitate transactions and participate in diverse investment opportunities, such as investing in Nigerian financial markets and instruments. NRNs can also directly invest in dollar-denominated Federal Government of Nigeria ("FGN") bonds through their NRNIA accounts. Investments in Nigeria's equities and local debt markets are required to be conducted using the local currency which will require a NRNIA account holder to convert the funds into Naira at the official rate.
Like the NRNOA, the NRNIA is to align with global AML/CFT principles to ensure transparency and reduce fraud and money laundering risks. In addition, investments made using the NRNIA are subject to applicable Nigerian taxes, though specific exemptions.
(c) Requirements for Opening a NRNOA or NRNIA
To open a NRNOA or NRINA account, a NRN is required to provide specific documentation to the Nigerian bank of their choice. Such documents include: a valid Nigerian passport or an expired Nigerian passport accompanied by a valid foreign passport or residence permit, a bank verification number, proof of residence (such as a utility bill which must be in the NRN's name), and proof of profession and source of income – for salaried individuals, the salary slip, bank account statement or tax receipts, while for self-employed individuals, the business registration document, bank account statement or tax receipts.
For NRNs that reside in the United States of America, the relevant IRS FATCA forms must also be completed before a NRNIA will be opened.
(d) Deposit Requirements
Deposits into the NRNOA and NRNIA are required to originate from external sources (that is, sources outside Nigeria) and through approved channels (such as Nigerian banks and CBN-licensed International Money Transfer Operators). Local deposits are prohibited, except for traceable proceeds from approved local investments linked to prior foreign currency inflows and settlement of foreign exchange transactions.
In addition, while transfers to other local accounts within Nigeria are allowed, such transfers must be made in Naira. Which means foreign currency cannot be transferred from any of the accounts under the Framework to an ordinary domiciliary account. Consequently, any transfer to be made from a NRNOA or
(e) Repatriation of Funds
One of the significant highlights of the Framework is the ease of repatriation of funds from a NRNOA or NRINA. Under the Framework, foreign currency balances in a NRNOA or NRNIA can be freely repatriated without a Certificate of Capital Importation or any other approval – that is, there is no restriction on the repatriation of the funds in any of the accounts offshore. Similarly, local currency balances in a NRNOA or NRINA can also be repatriated upon conversion into foreign currency, provided there is evidence that the funds originated from prior foreign inflows or the proceeds of local investments.
(f) Cash withdrawals
A holder of a NRNOA or NRNIA is permitted to make cash withdrawals from the account. This is, however, subject to applicable limits and reporting requirements for withdrawal of funds from accounts in the Nigerian banking system.
Differences with an ordinary foreign currency domiciliary account
Nigerians, whether resident in the country or not, are permitted to open and operate ordinary domiciliary accounts with Nigerian banks, provided that the prospective account holder meets the requirements to open and operate such accounts. They are permitted to make foreign currency deposit, transfer (with limited restriction) or withdrawal from such accounts. What then are the differences between a NRNOA or NRNIA and an ordinary foreign currency deposit account?
The primary distinction between the NRNOA/NRNIA and an ordinary domiciliary account is the target account holders. The NRNOA/NRNIA are specifically designed for Nigerians in diaspora. What this means is that only non-resident Nigerians are eligible to open and operate these accounts with foreign income earned abroad. Nigerians residing in Nigeria are not permitted to open or operate such accounts.
Any other Nigerian (whether resident in Nigeria or not) and foreigners may open and operate an ordinary domiciliary account.
Another key distinction that should be highlighted is the source of deposits in the respective accounts. Foreign currency deposits from both local and international sources may be deposited into an ordinary domiciliary account. On the other hand, the Framework does not permit local deposits in the NRNOA or NRNIA. The Framework requires that deposits into the NRNOA or NRNIA must originate from external sources through approved channels. Local deposits into the NRNOA or NRNIA are prohibited under the Framework, except traceable proceeds from approved local investments linked to prior foreign currency inflows and settlement of foreign exchange transactions.
In addition, while ordinary domiciliary account holders may make cash deposits into the account, cash deposits into the NRNOA or NRNIA are not permitted as the Framework requires foreign currencies to be deposited into the NRNOA or NRNIA to be transferred from external sources into the accounts.
Potential Benefits for Nigerians in the Diaspora
The Framework is strategically designed to strengthen ties between the Nigerian diaspora community and the Nigerian economy. By creating simplified and accessible financial channels, these accounts can potentially eliminate many barriers that previously hinder NRNs from participating in investment opportunities in the Nigeria's economy. These accounts will provide NRNs with improved access to financial opportunities in Nigeria, empowering them to contribute more effectively to the nation's socio-economic development and enable them to make investments in foreign currency-denominated securities.
One of the key benefits of the NRNIA is its ability to facilitate participation in Nigeria's financial market. NRNs can now invest directly in targeted instruments such as the diaspora bond and other locally issued debt instruments. These investment In addition, the NRNOA and NRINA serve as a streamlined and secured platform for managing funds through the Nigerian banking system. By enabling NRNs to handle their finances directly, the accounts have the potential to reduce the reliance on intermediaries, which often introduces significant costs, inefficiencies and risks. With the NRNOA, NRNs can seamlessly meet local obligations and commitments, such as supporting family members, paying for services, or handling property-related expenses, all within a safe and efficient banking framework.
Implications for the Nigerian Economy
The Framework is designed to increase foreign currency remittances to Nigeria and enhance liquidity in the foreign exchange market. The anticipated increase in foreign currency inflows would, in turn, bolster Nigeria's foreign exchange reserves. A rise in the foreign exchange reserves will help to stabilise the value of the Naira, reduce the pressure on the Nigerian foreign exchange market, and improve investor confidence in the Nigerian economy.
In addition, the establishment of the NRNIA will potentially encourage more targeted investments in the Nigerian economy. This will create a pathway for NRNs to inject capital into sectors critical for Nigeria's economic growth.
Lastly, the implementation of the Framework is expected to potentially deepen Nigeria's financial markets as facilitating diaspora participation in financial instruments, boost liquidity in the financial markets and strengthen their capacity to attract international investors. The increased activity in financial markets could lead to greater diversification of Nigeria's economic base, reducing the overreliance on oil revenues as the main source of foreign exchange and fostering economic resilience.
Conclusion
The Framework has far-reaching implications for the Nigerian economy. From the expected increased foreign currency remittances and enhanced financial market participation to the promotion of investments in critical sectors, the initiative has the potential to catalyse economic growth and stability.
The Framework not only supports the immediate needs of the economy but also lays the groundwork for sustainable development in the years to come by fostering a stronger connection between Nigerians abroad and their homeland. The Framework has been in operation for over four months. The CBN is yet to release any report on how the implementation is progressing and the amount of foreign currency that has been attracted into the Nigerian economy through the initiative. We hope that the CBN will release that information to provide the public details of how the implementation is progressing.
Footnotes
1. Please refer to the World Bank's publication titled "Remittances Slowed in 2023, Expected to Grow Faster in 2024 - Migration and Development Brief 40 June 2024 at https://documents1.worldbank.org/curated/en/099714008132436612/pdf/IDU1a9cf73b51fcad1425a1a0dd1cc8f2f3331ce.pdf
2. Please refer to the CBN's Press Release of 9th April 2025 titled "Nigeria Posts $6.83 Billion Balance of Payments Surplus in 2024, Signalling Economic Resurgence" at https://www.cbn.gov.ng/Out/2025/CCD/CBN%20Release%20on%20BoP.pdf
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