Africa: Remittances to Nigeria and Other African Countries Expected to Rise by 1.5% This Year

Remittances to Nigeria and other sub-Saharan African (SSA) countries are projected to increase by a modest 1.5% this year, boosting the inflow to $54.8 billion, according to a World Bank report released over the weekend. This increase is significant for many African households that depend on remittances for essentials such as food and healthcare.

Last year, remittances to the region experienced a slight decline of 0.3%, amounting to $54 billion. An increase in remittances to Nigeria, specifically, would provide more foreign exchange and alleviate pressure on the naira. The inflow reached its peak in 2018 at $24.3 billion, serving as a crucial injection into the local economy.

The World Bank report emphasized that remittances have supported the current accounts of several African countries grappling with food insecurity, drought, supply chain disruptions, floods, and debt-servicing difficulties.

However, the report also highlighted the high cost of sending money back home for Africans in the diaspora. Sending $200 to the region costs an average of 7.9%, a rate that has remained almost unchanged over the past year. SSA has the highest cost of remittance globally, although this cost has been stable compared to other regions that have seen an increase. For instance, remittance costs in Europe and Central Asia rose from 6.4% to 6.7%, while in the Middle East and North Africa, it decreased from 6.7% to 5.9%.

The World Bank noted that the period of strong growth in official remittance flows to low- and middle-income countries (LMICs) seen during 2021-2022 moderated last year to an estimated $656 billion.

In Nigeria and other African countries, many remittances are sent through unofficial channels to avoid high costs. While the cost has decreased in recent years, it has not dropped enough to make official channels more attractive to migrants. To address this, the Central Bank of Nigeria (CBN) introduced incentives, such as cash rebates for remittances sent through official channels. However, experts argue that these rebates do not offset the substantial fees charged by international money transfer organizations (IMTOs).

“Migration and resulting remittances are essential drivers of economic and human development,” said Iffath Sharif, Global Director of the Social Protection and Jobs Global Practice at the World Bank. Commenting on the new report, Sharif added, “Many countries are interested in managed migration in the face of global demographic imbalances and labor deficits on the one hand, and high levels of unemployment and skill gaps on the other. We are working on partnerships between countries sending and receiving migrants to facilitate training, especially for youth, to acquire the skills needed for better jobs and income both at home and in destination countries.”