How CBN Policies Drive Growth as Diaspora Remittances Rises by 10% to $14.2bn

Nigeria’s diaspora remittances has risen to $14.2 billion in the nine months ending September 2021, up to 10 per cent Year-on-Year, YoY, from $12.9 billion in the corresponding period of 2020, reflecting the impact of post-COVID economic recovery measures.

This is contained in a data from the Central Bank of Nigeria, CBN, which also shows that diaspora remittances rose by 5.1 per cent, quarter-on-quarter, QoQ, to $4.28 billion in the first quarter of 2021 (Q1 ’21) from $4.07 billion in Q4’2020. The upward trend continued in Q2 and Q3, when diaspora remittances rose QoQ by 21 per cent and 1.0 per cent to $4.92 billion and $4.97 billion.

Going by the trend, which translates to average quarterly remittances of $4.72 billion, annual diaspora remittances may hit $18 billion, slightly above the $17.6 billion projected by the World Bank for 2021. But observers believe it could be more going by the usual increases on Yuletide activities.

Citing  increasing influence of policies intended to channel inflows through the banking system, the World Bank in a report titled,  “Migration and Development Brief 35,”  released last November, had projected that Nigeria’s diaspora remittances will increase  2.5 per cent to $17.6 billion in 2021 from $17.2 billion in 2020. The 10 per cent, YoY increase in 9M-21 also represents a reversal of the 41 per cent decline recorded in 2020 when diaspora remittances fell to $16.94 billion from $23.45 billion in 2020 due to the impact of COVID-19 triggered economic lockdown on the incomes of Nigerians in diaspora.

In a bid to forestall this trend in 2021, the CBN in December 2020 introduced measures to encourage Diaspora Nigerians to send their remittances through the banking system.

Among other things, the measures allow beneficiaries to have unfettered access and utilization to foreign currency proceeds, either in foreign exchange cash and/or in their Domiciliary Accounts.

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Furthermore, the CBN directed payment switching and processing companies to stop local currency transfer of diasporal remittances received through International Money Transfer Operators (IMTOs).

The apex bank also directed Mobile Money Operators (MMO) to disable wallets from receipt of funds from IMTOs.

To complement these measures, the CBN in February 2021 introduced the “Naira4Dollar” scheme, which rewards beneficiaries of remittances with N5 for every $1 of remittance sent through the banks.