In 2016 Nigeria was the sixth largest beneficiary of migrant remittances among developing countries. The total according to the World Bank declined by 2.4% to US$429bn, and Nigeria’s inflows by 7.3% to US$19bn. These inflows represented an estimated 4.6% of GDP, making Nigeria much less dependent on remittances than other countries in the subregion such as Liberia (29.6%) and the Gambia (20.4%). For this year and next, the bank forecasts modest rises in total remittances to US$444bn and US$459bn respectively, with small gains for Nigeria.
Remittances to developing countries are now larger than official development assistance (aid in dated parlance) and more stable than private capital movements. It is curious therefore than governments do not devote more time to smoothing payments channels and offering incentives.
A dip in remittances to Nigeria in 2016 was to be expected when we allow for the far better rates available on the parallel market. The CBN’s many interventions since late February have changed the playing field to an extent. The new Investors’ and Exporters fx Window includes personal home remittances as eligible transactions. Yesterday’s indicative closing rate was N377.1 per US dollar, compared to N306.0 on the interbank market.
Remittance costs in sub-Saharan Africa are the highest in the world. They averaged 9.8% in Q1 2017 and so are far above the 3.0% target which is one of the sustainable development goals. The poor network of correspondent banking relationships in many countries and anti-money laundering legislation are partly to blame.
The World Bank’s estimate for 2016 is broadly consistent with the figure for current transfers in the CBN’s balance-of-payments once we exclude the small contribution from general government transactions.