In its latest Migration and Development Brief, the World Bank has asked Nigeria and other countries with significant remittance from the diaspora to leverage it to fight poverty and finance other needs in the country.
The international lender indicated that the diaspora inflow to Nigeria stood at $19.5bn, lower than the projected N20bn although it was the highest in the sub-Saharan African region at 35 percent.
The report noted that the decline in remittances was felt in other regions as well.
However, despite the slowdown, remittances still outpaced Foreign Direct Investment and Official Development Assistant, a pattern that the bank would expand in coming years due to migration pressures driven by demographic trends, income gaps, and climate change.
A part of the report reads “This is not to suggest that remittances could substitute for FDI or ODA. Developing countries need FDI, especially in critical infrastructure and green investments. They also need ODA to address public financing needs and externalities such as fragility and climate change. Instead, countries need to take note of the size and resilience of remittances and find ways to leverage these flows for poverty reduction, financing health and education, financial inclusion of households, and improving access to capital markets for state and non-state enterprises,”
When talking about cost, Sub-Saharan Africa has the highest remittance cost with an average of 7.9 percent compared to other regions.
According to the World Bank, these remittance costs comprise of payments, such as bank charges, money transfer operator’s percentage as well as stamp duties, among others.
The report added that the fees charged to senders (and sometimes recipients) were often masked by nontransparent foreign exchange markups.
“In many countries with multiple exchange rates, remittances tend to flow through unregulated channels. In such cases, the foreign currency may not even flow across borders, thus, depriving the recipient country access to foreign exchange,” the report said.
