Diaspora remittances surge by 90% during May boosting foreign exchange inflows by 163%

NIGERIA witnessed a 90% surge in diaspora remittances during the month of May with Nigerians living abroad sending back home a whopping $365.44m helping the total amount of foreign exchange inflows into the country to surge by 163%.

 

According to information just released by the Central Bank of Nigeria (CBN), diasporans upped their remittances between the months of April and May significantly. Experts say the development is positive for Nigeria’s economy amid the country rising debt profile and challenges of revenue diversification.

 

Industry analysts believe this increase is as a result of the CBN's efforts to boost foreign currency remittance flows via formal channels. Over recent weeks, the CBN has granted more licenses to international money transfer operators (IMTOs), with 14 new companies getting approved as part of a programme to boost diaspora remittances.

 

Under a plan to increase the amount of foreign exchange coming into the Nigerian economy, the CBN  aims to streamline remittance processes, remove challenges and encourage the commitment to boosting official channels. In January this year, the CBN removed the exchange rate cap earlier imposed on IMTOs to allow for more flexible currency quoting.

 

An adjustment was devised by revising operational guidelines and raising licensing fees for the operators, which shows the CBN’s efforts to enhance the sector's operational mechanisms and financial requirements. Experts see the development as positive for foreign reserves and the Nigerian currency, the naira, saying the two will have some respite to adjust to market realities.

 

Financial analyst and foreign exchange trader Ishaya Ibrahim, said: “If properly managed, the foreign reserve will be better because it will have some breathing space. The inflows can also defend the naira instead of dipping hands into the reserve to fight off the naira crash.

 

“What remains to be seen now is how the funds are properly channelled. However, I don't endorse the CBN ending foreign exchange intervention for bureau de change operators."

 

Over recent months, diasporans have been propping up the Nigerian economy as in February this year, remittances surged by 433% to $1.3bn from $300m in January. Historically, Nigeria has always been among the top five countries in the world when it comes to remittances behind India, Mexico, Egypt and the Philippines.

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