Nigeria: CBN Acting Governor Highlights Diversion of Diaspora Remittances as Cause of Naira Depreciation

The Central Bank of Nigeria (CBN) has identified the diversion of diaspora remittances to unofficial markets, particularly the parallel market, as a key factor contributing to the depreciation of the naira against the dollar and the challenges in managing the foreign exchange market.

This revelation came to light through statements made by the acting Governor of the CBN, Folashodun Shonubi, during a Distinguished Personality lecture titled “Diaspora Remittances and Nigeria Economic Development.” Shonubi delivered this lecture for members of the Executive Intelligence Management Course (EIMC) 16 at the National Institute for Security Studies, Abuja.

Shonubi explained that despite the inflow of diaspora remittances into Nigeria in the form of dollars, a significant portion of these funds remains undocumented and ends up in the parallel market. He noted that the unregulated nature of the parallel market makes it susceptible to criminal activities.

Shonubi emphasized the need to comprehend the dynamics of these remittance flows to ensure effective management of the foreign exchange market and to avoid reliance solely on available literature.

He suggested that controlling illegal remittances and identifying the channels through which they occur would be instrumental in channeling remittances into proper channels, thereby harnessing maximum economic benefits and aiding the country’s economic growth.

The CBN governor further elaborated on the challenges posed by numerous remittance inflows coming through unauthorized channels and eventually being directed to the parallel market. He emphasized the importance of working together to identify these channels and steer the flows towards approved avenues to maximize economic advantages.

Shonubi highlighted the significance of diaspora remittances for Nigeria’s economy, noting that for many countries, these remittances constitute a primary source of income.

In conclusion, Shonubi underscored the critical role of understanding these dynamics and implementing measures to ensure the proper and regulated flow of diaspora remittances. This, he believes, will contribute to stabilizing the foreign exchange market and fortifying the country’s economic foundations.