Second-quarter data from the CBN shows Nigeria recorded the lowest remittances from abroad since 2008 as Covid-19 affected the income of Nigerians living abroad and looking to snd money to loved ones back home.
According to the data, remittances fell to $3.3 billion in the second quarter of the year way lower than the average of $5.8 billion per quarter remitted to the country. The drop can be attributed to the Covid-19 pandemic.
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The data highlights just how bad the global economic crunch has affected the income of people across the world especially Nigerians in diaspora looking to send money to their families. Most have either lost their jobs or seen their earnings tumble due to the global lockdowns.
Nigeria also relies on dollar inflows from remittances to improve on its balance of payment position, a critical economic indicator used in determining a country’s foreign exchange position.
Total foreign remittances into the country rose to $23 billion in 2019 one of the highest on record helping boost income and investments in Nigeria. Poor countries like Nigeria rely heavily on these inflows to soften the low income paid to citizens while also funding millions of families from education to healthcare.
Nigeria Remittances only came second to oil as Nigeria’s top export earner much more than foreign portfolio and direct investments into the country.
Third-quarter numbers are likely to improve as the unemployment rate dropped in the third quarter of the year particularly in the US. For example, the US unemployment rate was as high as 14.7% in April at the height of the lockdowns but has since dropped to 7.9% in September 2020. It was 4.4% in March this year.
Why this matters: Apart from helping to stabilize the exchange rate, remittances are a critical source of cushion for millions of families in Nigeria.
- The global economic impact of the COVID-19 pandemic remains pervasive in most developed countries despite the easing of lockdowns.
- In fact, some countries, particularly in Europe are going through the second phase of lockdown meaning more jobs could be lost as we approach winter.
- Nigerians also look forward to the ember months for remittances and is also a useful tool at stabilizing the exchange rate. In the 4th quarter of 2019 and 2018, Nigerians in diaspora remitted $5.9 billion and $6.24 billion respectively.