LAGOS, 9 March 2021 – Nigeria’s Central Bank has introduced a “naira for dollar” scheme in an effort to expand remittances from its Diaspora.
Diaspora remittances to Nigeria fell drastically last year to just over $5.3 billion from a vry high $25 billion in 2019.
Under the initiative, the Central Bank would reward firve naira for every dollar sent by Nigerians living abroad through the international money transfer operator in the country.
Observers described the move as revealing of the importance Nigeria places on remittances to increase incomes for the most vulnerable of the country’s 202 million inhabitants.
In the recent past, remittances have generally represented a disproportionately high percentage of Nigeria’s budget.
In 2018, for example, the $23.5 billion in remittances represented 83 percent of the country’s budget and 6.1 percent of its gross domestic product (GDP).
Remittance flows from the Nigerian Diaspora in 2018 were eleven times higher than foreign investment flows into Africa’s most populous nation, according to management consultancy firm Pircewaterhouse Coopers.
Remittances from the Nigerian Diaspora outpace World Bank funding, by far.
Since 1960, the World Bank’s fund for the poorest countries known as IDA supported development work in 113 countries with an average annual commitment of about $18 billion in the three years to 2018, representing at least $7 billion short of remittances.
Only 54 percent of IDA’s average $18 billion a year went to African countries in 2018.
Nigeria’s Central Bank is hoping that the initiative it has launched will boost remittances up to about $2 billion a month in the course of 2021.
With the new coronavirus still punishing developed nations with many Nigerians abroad left unable to work or to earn the revenue they brought in before the outbreak of COVID-19, one projection by the African Growth Initiative sees remittances to sub-Saharan Africa falling by up to $3 billion in 2021.