CBN backed Flutterwave Swap to solve Nigeria’s FX crisis – In collaboration with Wema Bank, the tenth-largest bank in Nigeria based on assets, and Kadavra BDC, Flutterwave has initiated Swap, an effort to digitalize the country’s foreign currency (FX) market, with support from the Central Bank of Nigeria (CBN).
With the support of the CBN, Flutterwave has introduced a new product called Swap that would digitise the foreign exchange transaction for Nigerians. To offer liquidity and foreign exchange for the product, the fintech is utilising a collaboration with Wema Bank, a commercial bank, and Kadavra BDC, a bureau de change (BDC).
At a news conference last week, Mr. Folashodun Shonubi, the acting governor of the CBN, informed reporters that Swap might address the two main issues plaguing Nigeria’s foreign exchange market: the reliance on cash and the lack of cooperation between institutions.
“We think (Swap) will help moderate the rates for the BDCs and at the same time differentiate BDCs from black market transactions,” Shonubi stated. “No new licences were issued.” The foreign money will be imported by Flutterwave using its CBN-issued International Money Transfer Operator licence, sold by Kadavra using its BDC licence, and supported by Wema Bank throughout the entire process.
Shonubi continued, saying that while the CBN works to make the FX market cashless, BDCs that refuse to become digital would be gradually removed from the system.
“This makes it easier for us to distinguish between markets that the central bank regulates—like BDCs—and those that it does not.” He disclosed that unregulated overseas transactions would cease “because of what we’re doing here today,” and that the top bank would keep an eye on all Swap transactions.
A week after the CBN acting governor declared that the top bank will remove all foreign exchange backlogs in two weeks, Swap was launched. Although there has been no success with prior initiatives to clear the backlog, including as the widely reported $3 billion AFREXIM loan, CBN is keeping its fresh plans to clear years’ worth of FX backlog under wraps. Should these backlogs remain unresolved, a substantial amount of demand will continue to migrate to the black market, so restricting the CBN’s capacity to provide price stability.
“We recognise the difficulties that people and companies have obtaining foreign exchange. “Swap is our solution to those problems, offering a smooth and effective currency exchange platform,” stated Olugbenga Agboola, Flutterwave’s co-founder and CEO.
Swap is exclusively accessible to registered Nigerian users on the Flutterwave online app. With the product, users can only access dollars, euros, and pounds. Beginning in October, Flutterwave will also provide cards to Nigerians who need quick access to Business Travel Allowance (BTA) and Personal Travel Allowance (PTA).
Before using Swap, users must complete several identification verification steps and upload supporting documents online. In addition to a selfie, their bank verification number, a justification for the FX request, and supporting documentation, they would also need to provide these things. Users can type the account numbers they want the money placed into and receive it promptly after providing all the necessary details. Banks will also be able to access Swap using APIs.