The World Bank, on Wednesday, disclosed that diaspora remittances to Nigeria dropped sharply by 28 per cent in 2020.
It noted that this sharp drop was mostly responsible for the overall 12.5 per cent decline for Sub-Saharan African remittances during the year.
According to the report, high U.S. dollar-exchange premiums in informal markets was responsible for the drop in remittances through the Central Bank of Nigeria the report says.
Globally, however, remittance flows remained resilient in 2020, registering a smaller decline than previously projected because of COVID-19.
A year ago, the Bank envisaged a fall in migrant wages and employment overseas and forecast a drop of around 20 per cent in what has become an increasingly vital source of funds as governments and families in poorer countries have struggled to bear the pandemic’s financial cost.
The bank predicted the remittances will climb 2.6 per cent to $553 billion in 2021 and 2.2 per cent to $565 billion in 2022, the report projects.
“The resilience of remittance flows is remarkable. Remittances are helping to meet families’ increased need for livelihood support,” said Dilip Ratha, lead author of the report. “They can no longer be treated as small change.”
Officially recorded remittance flows to low- and middle-income countries reached $540 billion in 2020, just 1.6 per cent below the 2019 total of $548 billion, according to the latest Migration and Development Brief.
The decline in recorded remittance flows in 2020 was smaller than the 4.8 per cent recorded during the 2009 global financial crisis.
It was also far lower than the fall in foreign direct investment (FDI) flows to low- and middle-income countries, which, excluding flows to China, fell by over 30 per cent in 2020.
As a result, remittance flows to low- and middle-income countries surpassed $259 billion and overseas development assistance of $179 billion in 2020.
The main drivers for the steady flow included fiscal stimulus that resulted in better-than-expected economic conditions in host countries, a shift in flows from cash to digital and from informal to formal channels, and cyclical movements in oil prices and currency exchange rates.
The true size of remittances, which includes formal and informal flows, is believed to be larger than officially reported data, though the extent of the impact of COVID-19 on informal flows is unclear.
