Remittances by Nigerians in the Diaspora declined by 27.7 per cent in 2020, the World Bank has said.
A report by the World Bank titled ‘Defying predictions, remittance flows remain strong during COVID-19 crisis’ said Nigeria contributed 40 per cent of the remittances into Sub-Saharan Africa.
It put remittances to Sub-Saharan Africa at $42bn. Forty per cent contribution of Nigeria to this means that remittances to Nigeria was $16.8bn in 2020.
A decline of 27.7 per cent also put remittances into the country in 2019 at $21.45bn.
The report said remittances to Sub-Saharan Africa declined by an estimated 12.5 per cent due to a decline in the remittances to Nigeria that contributes the largest amount in the region.
Nigeria has been having foreign exchange crisis resulting from decline in earnings from crude oil sale.
Diaspora remittances is the second major source of foreign exchange for the country. Drying forex remittances recently pushed the Central Bank of Nigeria to offer an incentive of N5 for every dollar remitted through official channels.
Differing exchange rates often push Nigerians in the diaspora to explore alternative ways of remitting money into the country so that they can enjoy higher value.
The report stated that the decline in flows to Sub-Saharan Africa was almost entirely due to a 27.7 per cent decline in remittance flows to Nigeria.
Excluding flows to Nigeria, it stated, remittances to Sub-Saharan Africa increased by 2.3 per cent, demonstrating resilience.
Part of the report read, “Remittances to Sub-Saharan Africa declined by an estimated 12.5 per cent in 2020 to $42bn.
“The decline was almost entirely due to a 27.7 per cent decline in remittance 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.
“Remittance growth was reported in Zambia (37 per cent), Mozambique (16 per cent), Kenya (nine per cent) and Ghana (five per cent).”
The report said in 2021, remittance flows to the region were projected to rise by 2.6 per cent, supported by improving prospects for growth in high-income countries.
Data on remittance flows to Sub-Saharan Africa were sparse and of uneven quality, with some countries still using the outdated fourth IMF balance of payments manual, rather than the sixth, while several other countries did not report data at all, it stated.
The World Bank said that high-frequency phone surveys in some countries reported decreases in remittances for a large percentage of households even while recorded remittances reported by official sources report increased in flows.
The shift from informal to formal channels due to the closure of borders explained in part the increase in the volume of remittances recorded by central banks, it stated.
On the remittance costs for Sub-Saharan Africa, the report said it remained the most expensive region to send money to, where sending $200 costs an average of 8.2 per cent in the fourth quarter of 2020.
“Within the region, which experiences high intra-regional migration, it is expensive to send money from South Africa to Botswana (19.6 per cent), Zimbabwe (14 per cent), and to Malawi (16 per cent),” it stated.
The report said the relatively strong performance of remittance flows during the COVID-19 crisis had also highlighted the importance of timely availability of data.
Given its growing significance as a source of external financing for low and middle-income countries, there was a need for better collection of data on remittances in terms of frequency, timely reporting, and granularity by corridor and channel.
It stated that the lead author of the report on migration and remittances and head of KNOMAD, Dilip Ratha, said, “The resilience of remittance flows is remarkable. Remittances are helping to meet families’ increased need for livelihood support.
“They can no longer be treated as small change. The World Bank has been monitoring migration and remittance flows for nearly two decades, and we are working with governments and partners to produce timely data and make remittance flows even more productive.”
Despite COVID-19, remittance flows remained resilient in 2020, registering a smaller decline than previously projected.
Officially, recorded remittance flows to low and middle-income countries reached $540bn in 2020, just 1.6 per cent below the 2019 total of $548bn, according to the latest migration and development brief, the World Bank stated.