CENTRAL Bank of Nigeria (CBN) and PricewaterhouseCoopers (PwC) officials believe that the new remittance policy of the federal government will lead to the country’s foreign remittances rising to as much as $34.89bn by 2023.
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, saying transactions that are eligible under the new law are in line with global best practices. 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.
CBN and PricewaterhouseCoopers officials now believe that remittance flows could reach $34.89bn by 2023 if the policies were right. In a recent forecast, PwC noted that the growth in remittances is subject to global economic forces, which could spur or hinder growth of remittance flows, growth in emigration, economic conditions of residing countries and poor economic fundamentals in the Nigerian economy.
Its forecast revealed that as of 2017, the highest remittance came from the US, followed by the UK, Cameroon, Italy, Ghana, Spain, Germany, Benin Republic, Ireland and Canada. Nigeria’s diaspora remittance in 2019 was put at $21bn by the World Bank and it was forecast that they should have risen to $27.66bn in 2020 but experts believe the Covid-19 pandemic could curtail this.
A PwC spokesman said: “Several countries across the globe, including Nigeria, have developed plans towards attracting investment from their diaspora community for national development. Essentially, the extent to which the diaspora contributes to the developmental affairs of a country will be determined largely by trust.
“In summary, what is required is a coherent policy framework to harness remittances into generating capital for productive investments for the growth and development of small and micro-enterprises, which will in turn, create employment. In addition, remittances can be deployed toward philanthropic activities, which can serve as solutions for specific deficiencies in the local infrastructure such as schools, hospitals and roads.”
Nigeria’s CBN, which introduced a rebate of N5 for every $1 of funds remitted to Nigeria through international money transfer organisations (Imto) in its new forex policy, shared PwC’s forecast, saying increased remittances can only be accomplished if the 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 Imto’s in its new forex policy.
CBN governor, Godwin Emefiele, said: “In an effort to reduce the cost burden of remitting funds to Nigeria by working Nigerians in the diaspora, the Central Bank of Nigeria has introduced a rebate of N5 for every $1 of fund remitted to Nigeria, through Imtos licensed by the central bank. This rebate will be provided to the bank accounts of beneficiaries, following receipt of remittance inflows.
“Today, the World Bank data shows that Nigeria, with a total flow of $21bn, was the seventh largest recipient of remittances in 2019. This is behind India, China and even Egypt and although official remittance flows declined in 2020 due largely to the undermining impact of the Covid-19 pandemic, it maintained its dominance over foreign direct investment inflows.”