Net current transfers reached US$5.96bn in Q3 2018, a small decline on the previous quarter. (The figures for Q1 and Q2 have both been adjusted downwards by more than US$300m.) Workers’ remittances account for more than 95% of total transfers. The trend has been broadly positive over the past two years, reflecting the recovery of the global economy and, latterly, the oil price. The ease of making remittances and transaction times have greatly improved with mobile telephony. The flows have not grown at the same pace, however.
Transfers provided US$22.0bn in Nigeria in 2017, compared with US$4.8bn from FDI (gross) and US$8.5bn from FPI (albeit rising through the year due to the CBN’s fx reforms).
The size of the transfers explains why Nigerian policymakers would like to include the diaspora in their planning. Theirs is a doomed mission since the receiving institutions (banks and money transfer operators) are not required to ask for any information of the beneficiaries. We therefore have to make informed guesses as to where the proceeds are deployed (such as family support, farming or construction). Armed with this data, the authorities could frame sectoral policies and incentives for sectors such as agriculture and housing. This is the Ethiopian model.
World Bank data show that Nigeria was the fifth largest destination of remittances globally in 2017. It could well be overtaken by Egypt, which has reported a rise in such inflows from US$21.7bn to US$26.5bn in 2017/18 (July-June).
Current transfers (net; US$ bn)
Sources: CBN; FBNQuest Capital Research
Forecasting remittances is hazardous. The indicators to track are probably incomes per head in the main remitting countries, which in Nigeria’s case are the US, the UK and Gulf states.