Nigeria has the most significant diaspora remittance inflows in the Sub-Saharan region of Africa following an increase in the first half of the year. However, remittance to Sub-Saharan Africa increased by 6.2% to $45 billion in 2021. It’s predicted to grow by 5.5% in 2022.
In the first half of the year, Nigeria increased diaspora remittance by 15.6% quarter to quarter (QoQ) to $9.2 billion in contrast to the $7.98 billion recorded in the second half of 2020. It also shows a slight gain of 2.2% over the $9.02 billion recorded in the same period of 2020.
The increase in Nigeria’s diaspora remittance resulted from the Central Bank of Nigeria (CBN) Naira4dollar initiative. The Naira4dollar initiative gives recipients ₦5 for every $1 from licensed International Money Transfer Operators (IMTOs) and commercial banks. CBN initiated this to strengthen the external reserves and increase remittances.
According to a report, although Nigeria diaspora remittances have not recovered to the pre-pandemic level, the first half of the year records show the highest since the second half of 2019.
The recent surge in Nigeria’s diaspora remittance has helped stabilise the country’s current account, which was in a net deficit since the first quarter of 2021. It has also decreased to $424 million in the second quarter of 2021, from $2.1 billion in the previous quarter.
In a press release by World Bank, “Remittances to low- and middle-income countries are projected to have grown a strong 7.3% to reach $589 billion in 2021. 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% despite a severe global recession due to COVID-19”.
Michal Rutkowski, World Bank Global Director for Social Protection and Jobs, said, “Remittance flows from migrants have greatly complemented government cash transfer programmes to support families suffering economic hardships during the COVID-19 crisis. Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic”.