The World Bank’s estimate of 2020 remittances beat its upwardly revised forecasts and the bank has raised its 2021 forecasts.
According to the estimates, while middle income countries fell 2% in 2020 (compared to a forecast of -7%), the countries are expected to see a rise in remittances of around 3% in 2021.
Analysts say remittances growth is helping countries off set high commodity import bills or shortfalls in tourism flows as well as foreign direct investment especially in Egypt and Pakistan.
In this case, Nigeria, however, remains exceptional, where the collapse in remittances – down 75% in 1Q 2021, 88% in 4Q 2020, and -71% in full-year 2020 – is due to the dysfunction in the FX market.
The very large discount in the parallel rate versus the official one encourages remitters to use undocumented, unofficial channels.
It appears that the one-third of Nigerian remitters who hail from the US and Canada and are no longer so easily able to use Bitcoin transfers, because of a regulatory crackdown by the central bank in Nigeria, may have modestly shifted to more official channels, explaining the moderation in yoy decline seen in 1Q 2021 – while the one-quarter of remitters from neighbouring countries are likely still easily accessing unofficial routes.
While trade and migration barriers are going up, remittances from diaspora of low and middle income countries have confounded sceptics and also demonstrating that globalisation is yet alive.
