The Central Bank of Nigeria has stopped hundreds of global remittance firms from disbursing or receiving money sent from Nigerians in the diaspora to family members and others back home.

Just three remittance firms — all based in the U.S. — can continue operations in Nigeria: Western Union, MoneyGram and Ria, The Nation reported.

 

Many of the affected firms were not licensed to operate in Nigeria and violated operating guidelines, The Nation reported. The affected firms witheld dollar inflows meant to improve foreign currency liquidity in the country, and were paying local beneficiaries with naira instead of dollars.

The move by the central bank is draconian, said Ismail Ahmed, CEO and founder of London-based World Remit, in a press release.

WorldRemit is one of the international money transfer operators affected by the policy. It sends more than 40,000 money transfers to Nigeria every month.

The activities of some unregistered international money transfer operators are  detrimental to the Nigerian economy, the Central Bank of Nigeria said in a statement, according to Vanguard.

 

“All financial services providers in Nigeria, just as in other jurisdictions, are required to be duly licensed in order to protect both customers and the financial system as well as to ensure the credibility of financial transactions,” the central bank said.

“All licensed international money transfer operators are required to remit foreign currency to their respective agent banks in Nigeria for disbursement in naira to the beneficiaries. The Central Bank of Nigeria will not condone any attempt aimed at undermining the country’s foreign exchange regime.”

Nigeria receives more than $20 billion in remittances annually from migrants around the world, IBTimes reported.

World Remit learned from its local correspondents that transfers to Nigeria will no longer be processed and its services were suspended without warning.

The move by the central bank is “arbitrary, inexplicable and hugely detrimental to the Nigerian diaspora,” Ahmed said in a statement.

Nigerians rely on hundreds of money transfer companies and banks, providing them with choice, convenience and competitive pricing, Ahmed said in a statement.

“There is no clarity on why this sudden change has happened,” Ahmed said. “If it is on the basis of new rules, there was no warning. If it is a reinterpretation of old rules, local correspondent networks and banks should have been forewarned.

“This reverses the progress made by the country when the Nigeria Central Bank banned Western Union’s exclusivity agreements that had created a near-monopolistic position in the international money transfer market. Western Union controlled 78 percent of the market share when CBN outlawed exclusivity agreements with local banks.”

Until now, money transfer operators worked in partnership with licensed local correspondents in Nigeria, enabling transfer of funds to local bank accounts. This provided a more efficient service than the SWIFT infrastructure, according to World Remit.

In a 2015 memo, the Central Bank of Nigeria set out minimum requirements for companies offering international mobile money transfer services to Nigeria.

The guidelines specify that any company offering mobile money transfers must have minimum net assets of $1 billion and have been operating for more than 10 years.

“It looks like all systems in Nigeria are currently geared against encouraging new entrants and competition in the mobile remittance markets,” Ahmed said.

World Remit had been planning to launch mobile money services in Nigeria. Ahmed called for Nigeria to restore money transfers.