World Bank report released at the weekend has said remittances from Nigerians currently in the Diaspora are estimated to increase up to $21 billion (N3.28 trillion) for the 2013 fiscal year.
The report reveals that Nigeria has a strong and growing Diaspora community, especially in the United States, Europe and Asia and other fast growing economies across Africa, many of who are responsible for the remittance flows.
It also stated that Nigeria was among the top 10 recipients of migrant remittances in 2011 with $11 billion remitted by her teeming citizens in Diaspora.
The report, which was prepared by the Migration and Remittances Team of the World Bank’s Development Prospects Group, also projected that developing countries would receive over $410 billion in remittances this year, adding that remittances to the developing world are expected to grow by 6.3 per cent in 2013 to $414 billion and are projected to cross the half-trillion mark by 2016.
The report, which was contained in a statement at the weekend, further disclosed that global remittances, including those to high-income countries, are estimated to touch $550 billion by the end of this year and reach a record $707 billion by 2016, adding that India and China alone would represent nearly a third of total remittances to the developing world this year.
“The estimates reflect recent changes to the World Bank Group’s country classifications, with several large remittance recipient countries, such as Russia, Latvia, Lithuania and Uruguay no longer considered developing countries. In addition, the data on remittances also reflects the International Monetary Fund’s changes to the definition of remittances that now exclude some capital transfers, affecting numbers for a few large developing countries like Brazil.
“These latest estimates show the power of remittances. For a country like Tajikistan they constitute half the Gross Domestic Product (GDP). For Bangladesh, remittances provide vital protection against poverty. In terms of volume, India with $71 billion of remittances tops the global chart. To put this in perspective, this is just short of three times the Foreign Direct Investment (FDI) it received in 2012,” the report added.
Lending credence to this, Senior Vice President and Chief Economist of the World Bank, Kaushik Basu, noted that remittances act as a major counter-balance when capital flows weaken as happened in the wake of the US Fed announcing its intention to reign in its liquidity injection programme. Basu added that when a nation’s currency weakens, inward remittances rise and, as such, they act as an automatic stabilizer.
Meanwhile, growth of remittances has been robust in all regions of the world, except for Latin America and the Caribbean, where growth decelerated due to economic weakness in the United States. The top recipients of officially recorded remittances for 2013, according to the report, are India (with an estimated $71 billion), China ($60 billion), the Philippines ($26 billion), Mexico ($22 billion), Nigeria ($21 billion) and Egypt ($20 billion).
Other large recipients, the report said, include Pakistan, Bangladesh, Vietnam and Ukraine, adding that as a percentage of GDP, the top recipients of remittances in 2012 were Tajikistan (48 per cent), Kyrgyz Republic (31 per cent), Lesotho and Nepal (25 per cent each) and Moldova (24 per cent).
Also in his contribution, the Manager, Migration and Remittances Team at the bank’s Development Prospects Group, Dilip Ratha, said remittances are the most tangible and least controversial link between migration and development.
“Policymakers can do much more to maximise the positive impact of remittances by making them less costly and more productive for both the individual and the recipient country”,” the manager further stated.
Ratha also observed that the high cost of sending money through official channels continues to be an obstacle to the utilisation of remittances for development purposes, as people seek out informal channels as their preferred means for sending money home.
The report equally pointed out that global average cost for sending remittances is 9 per cent, broadly unchanged from 2012, noting that while remittance costs seem to have stabilised, banks in many countries have begun imposing additional “lifting” fees on incoming remittances. Such fees, it added, can be as high as 5 per cent of the transaction value.