Diaspora remittances drop sharply as the effects of the coronavirus pandemic hit hard

CENTRAL Bank of Nigeria (CBN) officials have revealed that diaspora remittances during the third quarter of 2020 fell by 61% to $1.09 from $2.8bn during the corresponding period of 2019 as the effects of the coronavirus pandemic but hard.

Nigeria's diaspora is the world sixth largest sender of remittances behind India, China, Mexico, the Philippines and Egypt, sending a total of $25.4bn back home in 2019. Over the last year, however, the economic lockdown brought about by the Covid-19 pandemic have had a telling effect as many diasporans have lost their jobs, many have died and those with businesses have been hit hard.

During the first nine months of 2019 Nigerian remittances totalled $17.5bn compared with $12.8bn in the corresponding period in 2020. With the economies of major Western economies like the US, UK and Canada still not yet fully functional, diasporans are finding it hard to match remittances of previous years.

CBN and PricewaterhouseCoopers (PwC) officials believe, however, that the governments new remittance policy will lead to the payments rising to as much as  $34.89bn by 2023. In December 2020, the CBN instructed all international money transfer operators to allow recipients of remittances to have the option of receiving their money in foreign exchange if they so desired.

A CBN spokesman said: “This new measure will help to make the process of sending remittances through formal bank channels cheaper and more convenient for Nigerians in the diaspora. PwC forecasts suggest that Nigeria’s remittance flows could reach $34.89bn by 2023 but this can only be accomplished if remittance infrastructure improves and if the right policies are put in place.”

As part of its reforms to boost the inflow of foreign currency in the country, the CBN introduced an incentive of N5 for every $1 of fund remitted to Nigeria through international money transfer organisations (Imto's) in its new forex policy. Up until last year, remittance recipients were only able to collect their cash in naira but with there currently being a chronic scarcity of foreign exchange in Nigeria, the CBN  altered its policy.