The various policy initiatives by the Central Bank of Nigeria to channel financial inflows through the country’s banking system appears to have witnessed some modest impact with foreign remittance inflows experiencing a moderate rebound in recent times.
The latest report by the World Bank on Wednesday said foreign remittances to Sub-Saharan Africa in 2021 grew by 6.2 percent to $45 billion, with Nigeria as the largest recipient.
In December 2020, the CBN issued series of circulars as part of a regime of new policies on diaspora remittances.
It was followed by another circular on January 22, 2021, spelling out the modalities for the payout of diaspora remittances following the disregard of its directives by International Money Transfer Operators and other unlicensed companies operating within the system.
The new policies directed that all remittances be paid to beneficiaries in dollars and not in Naira.
In the new circular, the CBN said only licensed IMTOs were permitted to facilitate diaspora remittances into Nigeria, while all diaspora remittances must be received by beneficiaries in foreign currency (by cash and/or transfers to domiciliary accounts or recipients).
The CBN also insisted that IMTOs were not permitted, under any circumstances, to disburse diaspora remittances in Naira (either in cash or by electronic transfers), be it through remittance settlement accounts (which had been earlier directed to be closed), third party accounts or via any other payment platforms within and/or around the Nigerian financial system.
The apex bank imposed stringent sanctions, including revocation of operational licenses, for any violation of the directives in the circulars aimed at promoting transparency, growing diaspora remittances, and significantly improving foreign exchange inflows into Nigeria.
The World Bank said remittances to low and middle-income countries were projected to grow at about 7.3 percent to about $589 billion before the end of the year.
The growing remittances, the Bank Migration and Development Brief noted, is better than earlier estimated when compared to the inflows in 2020 when remittances declined by only 1.7 percent despite a devastating global recession as a result of COVID-19.
For a second consecutive year, the Bank remittance flows to low- and middle-income countries (excluding China) are expected to surpass the sum of foreign direct investment (FDI) and overseas development assistance (ODA).
This, the Bank said, underscored the importance of remittances in providing a critical lifeline by supporting household spending on essential items such as food, health, and education during periods of economic hardship in migrants’ countries of origin.
“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, the World Bank Global Director for Social Protection and Jobs, Michal Rutkowski, said.
The report identified the factors contributing to the strong growth in remittance to include migrants’ determination to support their families in times of need, aided by economic recovery in Europe and the United States, which in turn was supported by the fiscal stimulus and employment support programmes.
“The immediate impact of the crisis on remittance flows was very deep. The surprising pace of recovery is welcome news. To keep remittances flowing, especially through digital channels, providing access to bank accounts for migrants and remittance service providers remains a key requirement.
“Policy responses also must continue to be inclusive of migrants especially in the areas of access to vaccines and protection from underpayment,” lead author of the Brief and head of KNOMAD, Dilip Ratha, said.