Nigeria, Other Middle, Low Income Countries Recorded $540bn Diaspora Inflows-World Bank

Despite COVID-19, remittance flows remained resilient in 2020, registering a smaller decline than previously projected.

Officially recorded remittance flows to low- and middle-income countries reached $540bn in 2020, just 1.6 per cent below the 2019 total of $548 billion, according to the latest Migration and Development Brief.

The decline in recorded remittance flows in 2020 was smaller than the one during the 2009 global financial crisis which stood at 4.8 percent).

It was also far lower than the fall in Foreign Direct Investment flows to low and middle-income countries, which, excluding flows to China, fell by over 30 percent in 2020.

As a result, remittance flows to low- and middle-income countries surpassed the sum of FDI ($259bn) and overseas development assistance ($179bn) in 2020.

The main drivers for the steady flow included fiscal stimulus that resulted in better-than-expected economic conditions in host countries, a shift in flows from cash to digital and from informal to formal channels, and cyclical movements in oil prices and currency exchange rates.

The true size of remittances, which includes formal and informal flows, is believed to be larger than officially reported data, though the extent of the impact of COVID-19 on informal flows is unclear.

In recent times, the CBN had been taking steps to boost remittances inflow from Nigerians in the Diaspora.

Just two months ago, the apex bank introduced a N5 incentive for every dollar remitted into the country by Nigerians in the Diaspora.

The apex bank confirmed the development in a circular sent to all Deposit Money Banks and International Money Transfer Operators

The circular dated March 5,2015 with reference number TED/FEM/PUB/EPC/01/003 was signed by the Director, Trade and Exchange Department of the CBN, Dr O.S Nnaji.

The CBN the initiative tagged “CBN Naira 4 Dollar Scheme” is part of efforts to sustain the encouraging increase in inflows of diaspora remittances into the country.

The apex bank in the circular said under the scheme, all recipients of diaspora remittances through the CBN licensed IMTOs shall henceforth be paid N5 for every $1 received as remittance inflow.

The implications of this, it stated, is that a typical recipient of Diaspora remittances will, at the point of collection, receive not only the dollar sent from abroad but also the additional N5 per dollar received.

The circular reads in part, “In an effort to sustain the encouraging increase in inflows of diaspora remittances into the country, the Central Bank of Nigeria hereby announces the introduction of the ‘CBN Naira 4 Dollar Scheme’, an incentive for senders and recipients of International Money Transfers.

Accordingly, all recipients of diaspora remittances through CBN licensed IMTOs shall henceforth be paid N5 for every USD1 received as remittance inflow.

“In light of this, the CBN shall, through commercial banks, pay to remittance recipients the incentive of N5 for every USD1 remitted by sender and collected by designated beneficiary.”

This incentive, according to the CBN is to be paid to recipients whether they choose to collect the dollars as cash across the counter in a bank or transfer same into their domiciliary account.

It said that having discussed with banks and IMTOs, the scheme takes effect from Monday March 8 2021 and ends on Saturday May 8 2021.

The World Bank had put the inflow of Diaspora remittance to Nigeria as of the end of 2019 at $23.8bn.