The Central Bank of Nigeria (CBN) has said that its foreign exchange policies especially the Naira4Dollar scheme has led to significant improvement in diaspora remittances into the country.
The apex bank revealed that diaspora inflow into Nigeria increased from an average of $6 million weekly in December 2020 to an average of more than $100 million weekly by January 2022.
This was disclosed by the CBN Governor, Godwin Emefiele, while speaking at a special press briefing at the end of the Bankers’ Committee meeting, on Thursday, February 10, 2022, at the CBN Headquarters in Abuja.
What the CBN Government is saying about remittances
Emefiele in his statement noted that diaspora remittances fell significantly in the wake of the Covid-19 pandemic just as the foreign exchange earnings dropped greatly due to slump in exports and crash in oil prices.
He said, “This is understandable because to the extent that COVID-19 led to significant job losses in many advanced economies, diaspora remittances also suffered commensurate reductions in inflows into Nigeria.
“All these factors jointly explain the heightened pressures on the currencies of major emerging market countries, including Nigeria.”
The CBN Governor noted that the lessons that have been learnt from its policies on remittances, which were initiated due to the inadequacy of forex supply and constant pressure on the country’s exchange rate, can be applied in improving some aspects of the foreign exchange inflow into the country.
He listed the 4 major sources of forex inflow into Nigeria to include; Proceeds from oil exports, Proceeds from non-oil exports, Diaspora remittances and Foreign Direct/Portfolio Investments.
What you should know
- Recall that the CBN, in a circular to all Deposit Money Banks (DMB) and International Money Transfer Operators (IMTO), in March 2021, introduced a ‘Naira 4 Dollar Scheme’ for diaspora remittances, which offers recipients of diaspora remittances through CBN’s IMTOs to be paid N5 for every $1 received as remittance inflow.
- It was introduced to encourage recipients of dollars to use formal banking channels and help the CBN capture such inflows to boost the liquidity of the forex market and ensure the stability of the Naira, which has been under pressure after the crash of oil prices last year due to the pandemic
This goes to confirm my belief in Nigerians in diasporas commitment to enhancing the Nigerian economy through genuine remittances. More incentives are expected from the CBN in order to encourage remittances such as the ongoing naira back support of five nairas for every one hundred dollars. The federal government could go a step further by making the landed property available at subsidized prices. There are Nigerians in the diaspora with interest in manufacturing but the cost of the landed property is a discouragement to their enthusiasm. Special consideration should be made available by a reduction in the cost of customs duties, etc. If the incentives are made to encourage the inflow of Forex, I promise a huge number of Nigerians in Europe and the USA will certainly take advantage of the opportunity. Nigerians in diasporas will contribute substantially to our foreign reserves if only the Federal Government will encourage the inflow of the Forex through reasonable incentives.
Where can we get data to show the top countries where these remittances come from??
CBN has the data. Every DMB submits daily, weekly and monthly reports on FX inflows and outflows. I doubt CBN are willing to share the data insights.
The CBN governor is being a bit disingenuous here. Diaspora remittances fluctuate on a week to week basis and so he cannot say a policy that has been in effect for months only increased remittances with the last one month. You would need to capture remittances for a whole year period to know if there is any significant increase. Nigerians living abroad cannot just say because there is a 1% ‘awoof’ given to their beneficiaries they will suddenly start sending money that they don’t have. You send money when you have a reason to do so or when there is a need in your family. More importantly, you send money when you have extra cash to actually send. CBN policy does not increase your salary in Europe or America so it cannot increase the amount of money you now send to Nigeria.