Remittance flows to Nigeria fell by 2.9 per cent to $19.5 billion in 2023, according to the World Bank’s latest Migration and Development brief.
The report, released on Wednesday, stated that remittances to Nigeria, accounted for around 35 per cent of total remittance inflows to Sub-Saharan Africa last year.
According to the report, remittance flows to Sub-Saharan Africa reached $54 billion in 2023, a slight decrease of -0.3 percent from the previous year.
It, however, said that remittance flows to the region are projected to rise by 1.3 percent in 2024, adding that: “The projected moderate growth in remittances reflects the expected slower growth in the United States while a feeble rebound is expected for Europe.”
The report noted that the economic growth rate in Canada, Europe, and the United States, “where large shares of remittance senders live,” will decrease from 1.6 percent in 2023 to 1.5 percent in 2024.
Specifically, the report said: “Remittance flows to Sub-Saharan Africa were nearly 1.5 times the size of FDI flows in 2023, and relatively more stable. FDI flows to the region reached $38.6 billion in 2023, driven primarily by greenfield project announcements in Kenya and Nigeria (UNCTAD 2024).
“The largest recipients of remittances in the region during 2023—measured in US dollar terms—include Nigeria, Ghana, Kenya, and Zimbabwe. Remittances have become the most important foreign exchange earner in several countries.
For example, for Kenya remittances are larger than the country’s key exports, including tourism, tea, coffee, and horticulture.19 Countries more dependent on receipts as a proportion of GDP include the Gambia, Lesotho, Comoros, Liberia, and Cabo Verde, with remittances contributing more than a fifth of GDP in the first three countries.”
It further said: “The regional growth in remittances in 2023 was largely driven by strong remittance growth in Uganda (15 percent to $1.4 billion), Rwanda (9.3 percent to $0.5 billion), Kenya (2.6 percent to $4.2 billion), and Tanzania (4 percent to $0.7 billion). Remittances to Nigeria, accounting for around 35 percent of total remittance inflows to the region, decreased by 2.9 percent to $19.5 billion.”
Although it stated that, “fixed exchange rates and capital controls continue to have an impact on foreign exchange markets and channels of remittance flows,” the report noted that “the Central Bank of Nigeria (CBN) has started to unify the foreign exchange market windows by introducing operational changes in the Nigerian Foreign Exchange Market.”
“The CBN has also outlined new operational modalities for commercial banks, Bureau de Change operators, and international money transfer operators. The CBN just licensed 14 such operators to increase competition in remittance transactions,” the report added.
However, the report said that Sub-Saharan Africa remains the region with the highest remittance costs as, “senders had to pay an average of 7.9 percent to send $200 to African countries during 2023Q4, compared with 7.4 percent in 2022Q4.”
For Low- and Middle-Income Countries (LMICs), the report said that after a period of strong growth during 2021-2022, officially recorded remittance flows to these countries moderated in 2023, reaching an estimated $656 billion.
“The modest 0.7% growth rate reflects large variances in regional growth, but remittances remained a crucial source of external finance for developing countries in 2023, bolstering the current accounts of several countries grappling with food insecurity and debt issues. In 2023, remittances surpassed foreign direct investment (FDI) and official development assistance (ODA),” it stated.
Commenting on the report, Global Director of the Social Protection and Jobs Global Practice at the World Bank, Iffath Sharif, said: “Migration and resulting remittances are essential drivers of economic and human development.”
“Many countries are interested in managed migration in the face of global demographic imbalances and labor deficits on the one hand, and high levels of unemployment and skill gaps on the other.
“We are working on partnerships between countries sending and receiving migrants to facilitate training, especially for youth, to get the skills needed for better jobs and income at home and in destination countries.”
Also, commenting on the report, lead economist and lead author of the report, Dilip Ratha, said: “The resilience of remittances underscores their importance for millions of people. Leveraging remittances for financial inclusion and capital market access can enhance the development prospects of recipient countries.
“The World Bank aims to reduce remittance costs and facilitate formal flows by mitigating political and commercial risks to promote private investment in this sector.”
