W’Bank Projects Nigeria’s Diaspora Remittances to Exceed $20bn in 2023
The World Bank says Diaspora remittance into Nigeria is expected to exceed $20bn by the end of the year as total remittances into the Sub-Saharan Africa region increase by 1.9 per cent.
This was revealed in the World Bank’s latest Migration and Development Brief released this month, which stated that the global remittance flows would continue to grow in 2023 although at a slower pace.
The reports said, “Remittances to Sub-Saharan Africa are estimated to grow by 1.9 per cent from $53bn in 2022 to $54bn in 2023. Projections indicate that remittances to the region will keep increasing, to $55bn by 2024. The slowed growth in remittances observed in 2023 is explained by the slow pace of growth in the high-income economies where many Sub-Saharan African migrants earn their income.
“Remittances to Nigeria, accounting for 38 per cent of remittance flows to the region, grew by about two per cent, while two other major recipients, Ghana and Kenya, posted estimated gains of 5.6 per cent and 3.8 per cent, respectively.”
It was also revealed that fixed exchange rates and capital controls were diverting remittances to the region from official to unofficial channels.
“In 2024, remittance flows to the region are projected to increase by 2.5 per cent. Remittances from the United States have remained stable. Although the euro area has recovered, its output remains 2.2 per cent below pre-pandemic projections,” it added.
At the current official market rate of N885.88 per dollar, the expected total diaspora remittance is estimated at N17.717tn.
Remittances are an important source of financing for the SSA region and according to the World Bank.
Remittances have been more stable than Foreign Direct Investments, which have demonstrated considerable volatility over the past two decades. Remittances to the region significantly exceeded FDI flows in 2023.
“Regional growth in remittances in 2023 was largely driven by strong remittance growth in Rwanda (16.8 per cent), Ethiopia (16 per cent), and Mozambique (48.5 per cent). Nigeria, the largest remittance-recipient country in Sub-Saharan Africa, is expected to receive more than $20bn in official remittances by the end of 2023, a slight increase compared with the previous year. In Ghana, the second-largest recipient, remittances increased to $921.17m in 2023Q2, from $691.60 million in 2022Q2,” the report said.
In terms of remittance costs, the World Bank report said that SSA remains the region with the highest remittance costs. The average cost of sending $200 to the Sub-Saharan Africa region slightly increased, averaging 7.9 per cent in 2023Q2 compared with 7.2 per cent in 2022Q2.
Speaking on the report, the Global Director of the Social Protection and Jobs Global Practice at the World Bank, Iffath Sharif, said “During crises, migrants have weathered risks and shown resilience to support families back home. However high inflation and subdued global growth are affecting how much money they can send. Labour markets and social protection policies in host countries should be inclusive of migrants, whose remittances serve as a vital lifeline for developing countries.”
Lead economist and lead author of the report, Dilip Ratha, pointed out that “Remittances are one of the few sources of private external finance that are expected to continue to grow in the coming decade. They must be leveraged for private capital mobilisation to support development finance, especially via diaspora bonds. Remittance flows to developing countries have surpassed the sum of foreign direct investment and official development assistance in recent years, and the gap is increasing.”
Nigerians abroad had sent $20.1bn home in 2022.
