Diaspora remittance expected to rise 2.5% YoY
By Jeph Ajobaju, Chief Copy Editor
Diaspora remittance to Nigeria may hit $17.6 billion this year by World Bank projections which would translate into a 2.5 per cent rise from $17.2 billion in 2020, buoyed by the ‘Naira 4 Dollar Scheme’ of the Central Bank of Nigeria (CBN).
Nigerians in the diaspora remitted $4.2 billion in the first quarter of 2021 (Q1 2021),
a 24 per cent dip compared with $5.6 billion in Q1 2020. The total for full year 2020 (FY 2020) was $16.9 billion, less than half $23.4 billion in FY 2019.
Regardless, the World Bank in its “Migration and Development Brief 35” report anticipates a moderate increase in diaspora remittances because of CBN policies intended to channel inflows through the banking system.
The World Bank projects a 7.3 per cent jump in remittances to low and middle income countries and a 6.2 increase to Sub-Saharan countries in 2021.
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Remittance growth in 2021
“Remittances to low- and middle-income countries are projected to have grown a strong 7.3 percent to reach $589 billion in 2021,” the World Bank said, reported by Vanguard.
“This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 per cent despite a severe global recession due to COVID-19, according to estimates from the World Bank’s Migration and Development Brief.
“Remittance inflows to Sub-Saharan Africa returned to growth in 2021, increasing by 6.2 percent to $45 billion.
“Nigeria, the region’s largest recipient, is experiencing a moderate rebound in remittance flows, in part due to the increasing influence of policies intended to channel inflows through the banking system.”
The World Bank listed countries where the value of remittance inflows as a share of Gross Domestic Product (GDP) is significant to include
- The Gambia (33.8 percent)
- Lesotho (23.5 percent)
- Cabo Verde (15.6 percent)
- Comoros (12.3 percent)
“In 2022, remittance inflows are projected to grow by 5.5 percent due to continued economic recovery in Europe and the United States.
“Costs averaged 8 percent in the first quarter of 2021, down from 8.9 percent a year ago. Although intra-regional migration makes up more than 70 percent of cross-border migration, costs are high due to small quantities of formal flows and utilization of black-market exchange rates.”
Naira 4 Dollar Scheme
The CBN implemented between March 8 and May 8 a ‘Naira 4 Dollar Scheme’ in which recipients of diaspora remittances through international money transfer operators (IMTOs) approved by the CBN were paid N5 for every $1 received.
It was an incentive for senders and recipients to increase inflows through IMTOs which keep official records instead of through informal players.
The CBN through commercial banks paid recipients N5 for every $1 remitted by a sender and collected by a designated beneficiary.
The bonus was paid whether recipients collected United States dollars as cash across the bank counter or transferred it to their domiciliary account.
A typical recipient of diaspora remittance received both the dollar sent from abroad and the additional N5 per dollar received.