Nigeria’s remittances jump 130% in one year

The Central Bank of Nigeria (CBN) has reported a significant increase in remittance inflows of $553 million in July 2024.

The figure represents a 130 percent increase from what was seen in the corresponding period in 2023, and represents the highest monthly total inflows on record, according to the Central Bank of Nigeria (CBN).

The inflows reflect ongoing efforts by the CBN to enhance liquidity in Nigeria’s foreign exchange market, including policy measures to sanitse the market, instill transparency and boost confidence.

Read also: CBN reports all-time high remittance inflows of $553m for July

Those measures include: Granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller foreign exchange model, and enabling timely access to naira liquidity for IMTOs.

Diaspora remittances are a crucial source of foreign exchange for Nigeria, supplementing both foreign direct investment and portfolio investments.

“The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year,” Hakama Sidi Ali, CBN acting director, corporate communications, said in a statement.

“The increase in remittances is a strong testament to the success of the CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.”

Recent data from the National Bureau of Statistics (NBS) revealed that Nigeria’s year-on-year headline inflation rate slowed in July 2024, for the first time in 19 months – a pointer that CBN’s monetary policy tightening measures may have started delivering positive results – though experts say it may be early days.

“The CBN anticipates that these measures will contribute to achieving its broader objective of maintaining stability in the foreign exchange market.

“The Bank will continue to monitor market conditions and adjust policies as necessary to enable greater remittance flows into Nigeria,” Sidi Ali further stated.

Indians in diaspora in the financial year 2023-24 sent a record $107 billion in remittances back home, surpassing the $100 billion mark for the second consecutive year. This amount is nearly double the combined total of net foreign investments—both FDI and portfolio investments—which stood at $54 billion for the year.

Analysts in the financial services sector said investment in education, especially, skills and talent development, and exports can help Nigeria to attract $100 billion yearly remittances like India.

Nigeria’s external reserves, which give the CBN the firepower to defend the naira, declined by 1.07 percent to $36.476 billion as of August 19, 2024 from $36.872 billion recorded on August 7, 2024, data from the CBN indicated.

Read also: CBN grants IMTOs naira access to boost remittances

The naira on Tuesday lost 0.81 percent as the dollar was quoted at N1,592.06 compared to N1,579.22 on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data from the FMDQ Securities Exchange Limited.

According to the World Bank, the Nigerian diaspora remit between $20 billion and $25 billion annually, but these remittances are not intentionally directed to private equity funds.

The global lender said remittances are a vital source of household income for Low and Middle Income Countries (LMICs). They alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher school enrollment rates for children in disadvantaged households.

Studies show that remittances help recipient households to build resilience, for example, through financing better housing and to cope with the losses in the aftermath of disasters.