Nigeria Attracts $20.52bn Remittance Flows in 2023

By Adedapo Adesanya

Nigeria accounted for 38 per cent of the $54 billion remittance flows to the Sub-Saharan Africa (SSA) region, taking up $20.52 billion in 2023, higher than the 2022 figures by about 2 per cent.

According to the World Bank’s latest Migration and Development Brief released on Monday, it was disclosed that remittance flows to the region are expected to have increased by about 1.9 per cent in 2023, driven by strong remittance growth in Mozambique (48.5 per cent), Rwanda (16.8 per cent), and Ethiopia (16 per cent).

“Remittances to Nigeria, accounting for 38% of remittance flows to the region, grew by about 2%, while two other major recipients, Ghana and Kenya, posted estimated gains of 5.6% and 3.8%, respectively,” the report seen by Business Post noted.

The report warned that fixed exchange rates and capital controls are diverting remittances to the region from official to unofficial channels.

This echoed what was said by the former acting Governor of the Central Bank of Nigeria (CBN) who lamented in August that a lot of diaspora remittances arrived in Nigeria in Dollars and ended up in the parallel market without being officially documented.

“With those remittances, the dollars have come in, we know the dollars have come in but we don’t see them in the official system. So, they must be going somewhere and somewhere. The challenge with the black market, unofficial market or parallel market, or whatever name you want to call it, it is not regulated, and it becomes an easy place to have criminal activities.

“Some of the funding in the black markets is actually from diaspora remittances. That’s why it’s important we need to know a lot of what’s going on there,” he added.

In 2024, remittance flows to the SSA region are projected to increase by 2.5 per cent. Driving the moderated forecast are slowing economic growth and the prospect of weaker job markets in several high-income countries.

Additional downside risks include volatile oil prices and currency exchange rates, and a deeper-than-expected economic downturn in high-income countries.

The report also lamented that remittance costs remain persistently high, costing 6.2 per cent on average to send $200 as of the second quarter of 2023. For the region, it would cost 7.9 per cent on average.

By region, remittance inflows grew for Latin America and the Caribbean (8 per cent), South Asia (7.2 per cent), East Asia and the Pacific (3 per cent), and Sub-Saharan Africa (1.9 per cent).

Flows to the Middle East and North Africa fell for the second year, declining by 5.3 per cent mainly due to a sharp drop in flows to Egypt. Remittances to Europe and Central Asia also fell by 1.4 per cent after gaining more than 18 per cent in 2022.

The United States continued to be the largest source of remittances. The top five remittance recipient countries in 2023 are India ($125 billion), Mexico ($67 billion), China ($50 billion), the Philippines ($40 billion), and Egypt ($24 billion).

Economies where remittance inflows represent substantial shares of gross domestic product (GDP) – highlighting the importance of remittances for funding current account and fiscal shortfalls – are Tajikistan (48 per cent), Tonga (41 per cent), Samoa (32 per cent), Lebanon (28 per cent), and Nicaragua (27 per cent).