+Nigeria drops from 6th to 9th Globally
Fewer Funds for the Folks back Home
Nigeria’s international remittances in 2022 were almost at the same level as they were in 2010. Like my friend Aisha, one might wonder why this matters to you.
I reminded Aisha about her uncle in Germany who used to send money through her domiciliary account to his wife and children, and how she noted that the Uncle has stopped sending money to Nigeria since his family travelled abroad to meet him.
In short, if a relative or friend sends you money from another country, that’s an international remittance to Nigeria.
Remittances are known as “funds for the folks back home” according to the International Monetary Fund (IMF). It is the money or goods that migrants send back to families and friends in origin countries.
The general trend shows a decline in international remittances to Nigeria in the last 13 years.
Several factors could be responsible for this. This include difficulty in processing transfers, the higher rate of travel alongside dependants that reduces the need to send money home, and global events such as tough economic conditions abroad and the effects of the COVID-19 pandemic on income of nationals abroad.
According to the Asian Development Bank (ADB), poverty intensity can be decreased by 16% with every 1% rise in international remittances to a country.
This implies that a reduction in foreign remittances may result in lower household income, higher rates of poverty, lower consumption, lower out-of-pocket expenditures on health and education, and slower rates of economic growth.
The ADB added that after foreign direct investment (FDI), international remittances are the second most significant external financial source for developing nations.
World Bank data shows that, on average, the international remittance received by a recipient of remittances reduced from $122.67 in 2010 to $92 in 2022.
This shows that an individual who used to get $122 from relatives abroad in 2010 now gets $92 in 2022 as a direct remittance.
Nigeria experienced its lowest level of total overseas remittances in 2020. The World Bank attributed this to the COVID-19 pandemic.
This marked the first time the country saw such a significant drop in remittances. Following the pandemic year, remittances began to recover. By 2022, the amount reached $20.13 billion, reflecting an increase from the pandemic-induced low.
However, the 2022 figure was still below the amount recorded in 2015, indicating that while there is an upward trend lately, remittances are yet to return to their previous peak levels.
Nigeria drops from 6th to 9th Globally
From 2010 to 2022, Nigeria has consistently ranked among the top 10 countries receiving international remittances.
Data shows that in 2010, Nigeria’s position as the 6th largest recipient reflected a strong and stable inflow of remittances, underpinned by a large and active diaspora.