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World Bank: Remittance inflows to Nigeria fell by 27.7% to $17.2bn

Agusto projects $22bn payments into Nigeria in 2021

A 27.7per cent decline to $17.2billion in remittances to Nigeria last year led inflows to sub- Saharan Africa dropping by 12.5 per cent to $42 billion in 2020, a World Bank rereport shows. According to the bank’s “Migration and Development Brief” released yesterday, excluding flows to Nigeria, remittance to sub- Saharan Africa increased by 2.3 per cent, demonstrating resilience.

It stated: “Remittance flows to sub-Saharan Africa were estimated to have declined by 12.5 per cent in 2020. The decline was almost entirely due to a 27.7 per cent decline in re-mittance flows to Nigeria, which alone accounted for over 40 per cent of remittance flows to the region. Excluding Nigeria, remittance flows to sub-Saharan African increased by 2.3 per cent, demonstrating resilience at a time of crisis.” The report noted that remittance flows to the region were affected by COVID-19, especially by restricted mobility measures and the employment situation in the main host countries.

However, for Nigeria, it stated: “The decrease inflows to Nigeria is partly attributable to a high (27 per cent) premium on the naira/$ exchange rate in informal markets, and an unexpected policy directive requiring the agent banks of money transfer operators to pay out in US dollars (or hard currency) rather than naira.” The report said that remittance flows to the region are projected to rise by 2.6 per cent ($43 billion) and 1.6 per cent ($44 billion) in 2021 and 2022, respectively, adding that “Remittances are expected to be supported by improving growth prospects in the United States and other high-income host countries.”

In a report released a few days ago, Agusto Consulting Limited projected that “Nigeria’s diaspora remittances will reach $22 billion by 2021, representing a year-on-year rise of five per cent. And then, a marginal year-on-year rise of two per cent in 2022 to $22.5 billion.” Meanwhile, according to the World Bank report, global remittance flows remained resilient in 2020, registering a smaller decline than previously projected despite the pandemic. Officially recorded remittance flows to low- and middle-income countries reached $540 billion in 2020, just 1.6 per cent below the 2019 total of $548 billion, the report said. “The decline in recorded remittance flows in 2020 was smaller than the one during the 2009 global financial crisis (4.8 percent).

It was also far lower than the fall in foreign direct investment (FDI) 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 ($259 billion) and overseas development assistance ($179 billion) in 2020,” it said. The report attributed the steady flow of remittances to several factors including fiscal stimulus that resulted in better-thanexpected 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.

It, however, noted that the true size of remittances, which includes formal and informal flows, is believed to be larger than officially reported data, stressing that the extent of the impact of COVID-19 on informal flows is unclear. The report listed India, China, Mexico, the Philippines, and the Arab Republic of Egypt as the top five remittance recipient countries last year. India has been the largest recipient of remittances since 2008.

The United States was the largest source country for remittances in 2020, followed by the United Arab Emirates, Saudi Arabia, and the Russian Federation. “As COVID-19 still devastates families around the world, remittances continue to provide a critical lifeline for the poor and vulnerable,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank. “Supportive policy responses, together with national social protection systems, should continue to be inclusive of all communities, including migrants,” he added.

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