Adedapo Adesanya
By Adedapo Adesanya
Flutterwave has launched Swap, a digitally oriented attempt to solve challenges in the Nigerian foreign exchange (FX) market.
The firm, which is Africa’s most valued startup, has gotten the approval process of the Central Bank of Nigeria (CBN) and will execute the product in partnership with Wema Bank and Kadavra Bureau De Change (BDC).
Flutterwave will leverage its International Money Transfer Operator (IMTO) 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.
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.
“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,” Mr Shonubi reportedly said.
Mr Shonubi added 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.”
Speaking on the development, Mr Olugbenga Agboola, the CEO and co-founder of Flutterwave, said Swap will seek to answer the challenges of getting FX by individuals and businesses.
“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,”
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. The process involves the submission of 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.
The launch of Swap comes a week after the CBN acting governor said the apex bank would clear all FX backlogs within two weeks.
This is the latest move by the central bank to prop up the Naira, which is facing heavy supply issues with a backlog worth over $10 billion.
Last month, the apex bank announced a $3 billion loan through the Africa Export-Import Bank (Afreximbank) and the Nigerian National Petroleum Company (NNPC) Limited, but it has not been able to solve the issue long term.
Since the liberalisation of the exchange rate, the renewed pressure on the local currency has returned as the rate disparity has widened at the official market against the black market, with the rate closing at N736/$1 in the former and settling at N929/$1 in the latter.
