By Jeph Ajobaju, Chief Copy Editor
Remittances from Nigerians living abroad totalled $4.2 billion in the first quarter of 2021 (Q1 2021), a 24 per cent drop against $5.6 billion in Q1 2020, according to figures compiled by the Central Bank of Nigeria (CBN).
Workers’ remittances, as CBN data captures them on its website, are the amount of dollar inflows sent through the banking system by Nigerians in the diaspora.
Nairametrics, which reported the CBN data, notes that Nigeria relies heavily on diaspora remittances to shore up balance of payment obligations.
Nigeria received about $16.9 billion in workers’ remittance inflows in full year 2020 (FY 2020) compared to $23.4 billion in FY 2019.
Workers’ and cash remittances
The CBN reports two remittance data – workers’ remittances and cash remittances.
Workers’ remittances include cash and other non-cash related items and do not represent actual cash imported by diaspora Nigerians. However, it is a fair representation and gauge of foreign (forex) inflows from Nigerians living abroad.
Total home remittances captured in CBN’s forex exchange flows, which largely represent cash inflows, was about $1.2 billion in 2020 against $3.2 billion in 2019 and $1.7 billion in 2018.
Pandemic effect
The pandemic has negatively impacted Western economies in the past year, resulting in trillions of dollars of stimulus packages in Europe and the United States for citizens, including Nigerians who own foreign passports.
This has impacted reliance diaspora inflows as more Nigerians prioritise survival overseas above sending money back home.
However, Nairametrics adds, a more plausible cause of the drop in diaspora remittances year-on-year (YoY) is Nigeria’s forex policy that leaves diaspora Nigerians with little option but to transfer funds through black market channels.
Some also rely on peer-to-peer transfer mechanisms supported by cryptocurrency, which could also understate the actual remittances sent home.
Official vs black market naira rate
In March, the CBN launched its naira-4-dollar scheme that attracted a N5 reward for every dollar transferred via the banking system.
The policy seeks to shore up forex liquidity and crash black market rates. However, the exchange rate continues to depreciate, hitting an all-time low of N530/$1 at the end of last week.
The CBN is yet to release data on foreign currency remittances for Q2 2021 and yet to provide details of the success of its naira-4-dollar scheme.
Nigeria’s external reserves as of August 2021 stood at $34 billion as oil revenues and capital importation fail to increase.
Exchange rate disparity between the black market and the official market was more than N120 as of last week.