Nigeria’s 2021 remittance inflows up 11.2% to $19.2bn

Remittances into Nigeria saw a significant increase in 2021, rising by 11.2% to $19.2 billion after a steep 28% decline in 2020, according to a report by the World Bank. This surge in remittances was mirrored in Sub-Saharan Africa, which experienced a 14.1% climb to $49 billion in inflows during the same period. Steve Osho, Co-Managing Partner at Comercio Partners, shared insights on this remarkable turnaround during an interview on CNBC Africa. Osho attributed the rise in remittances to various factors, including the impact of the COVID-19 pandemic in 2020, which prompted individuals in the diaspora to send funds back home to support their families. He noted that African countries were lagging behind in terms of remittances compared to other regions, but there has been a steady increase in flows over the years, especially to sectors like fintech and financial services. One of the key drivers of the surge in remittances, as highlighted by the World Bank, was the stabilization of the Naira against the dollar within a range of 410 to 415 at the official market. Additionally, the Naira for Dollar scheme introduced by the Central Bank of Nigeria (CBN) also contributed to the increase in remittance inflows. While there were initial concerns about the effectiveness of the schemes, Osho acknowledged that they had a positive impact on remittances, albeit with some challenges. However, Osho raised a critical issue regarding the widening gap between the official and parallel market exchange rates, which currently stands at around 260 Naira to the dollar in the parallel market compared to 420 to 440 in the interbank market. He emphasized the need to bridge this gap to attract more remittances through official channels, which would have a direct impact on reserves and the economy. In light of the efforts to boost reserves, Osho emphasized the importance of addressing fiscal challenges and increasing exports to capitalize on high oil prices. He highlighted the need for fiscal responsibility from the federal government to complement the measures undertaken by the CBN. Osho stressed the urgency of plugging loopholes in revenue generation and maximizing proceeds from oil sales to strengthen reserves. As global inflation continues to affect discretionary income globally, Osho expressed concerns about its potential impact on remittance flows from the diaspora. With inflationary pressures mounting worldwide and disruptions in the supply chain, there could be a slowdown in remittance flows. However, Osho remained hopeful that central banks and policymakers would work to mitigate inflationary pressures and stabilize the global economy, which could in turn sustain remittance flows to emerging markets like Nigeria. Overall, the surge in remittance inflows in 2021 reflects a positive trend for Nigeria and Sub-Saharan Africa, signaling resilience in the face of challenges and opportunities for economic growth and stability.