Net current transfers reached a record US$6.31bn in Q4 2018, an increase of 7.8% on the comparable year-earlier period. The fourth quarter generally provides the high point for the year because the diaspora likes to make transfers to family and friends for the holiday season. 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. The data naturally exclude transfers made through unofficial channels.
- These transfers provided US$24.1bn in Nigeria in 2018, compared with US$12.5bn from net foreign portfolio investment. The figure for FDI, adjusted for investment by Nigerian residents abroad, was marginally negative.
- Remittances accounted for 26.4% of current-account receipts in the 12 months to September 2018, second only to the 61.2% share of crude oil and gas exports.
- The size of the transfers, equivalent to about 6% of GDP at the CBN exchange rate, explains why Nigerian policymakers would like to include the diaspora in their planning. This is a huge challenge because the receiving institutions (banks and money transfer operators) are not required to ask for any information of the beneficiaries.
- Remittances to Egypt reached US$26.3bn in 2017/18 (July-June) and so surpassed Nigeria. In per head terms, the impact was substantially greater since the population is roughly one half of Nigeria’s.
Current transfers (net; US$ bn)
Sources: CBN; FBNQuest Capital Research
- Forecasting remittances is a hazardous exercise. The indicators to track are probably incomes per head in the main remitting countries, which in Nigeria’s case are the US, the UK, Germany, Italy and the Gulf states.