The Central Bank of Nigeria’s ‘Naira-for-Dollar’ policy may increase the country’s foreign remittances to $34.89bn by 2023. Forecast by PricewaterhouseCoopers, one of the big four accounting firms, had suggested that Nigeria’s remittance flows could reach $34.89bn by 2023 if the policies were right.
PwC in the forecast noted that the growth in remittances is subject to global economic forces, which could spur or hinder growth of remittance flows, growth in emigration, economic conditions of residing countries and poor economic fundamentals in the Nigerian economy.
The forecast revealed that as of 2017, the highest remittance came from the United States, followed by the United Kingdom, Cameroon, Italy, Ghana, Spain, Germany, Benin Republic, Ireland and Canada. It added, “Several countries across the globe, including Nigeria, have developed plans towards attracting investment from their diaspora community for national development. Essentially, the extent to which the diaspora contributes to the developmental affairs of a country will be determined largely by trust.
“In summary, what is required is a coherent policy framework to harness remittances into generating capital for productive investments for the growth and development of small and micro-enterprises, which will in turn, create employment. In addition, remittances can be deployed toward philanthropic activities, which can serve as solutions for specific deficiencies in the local infrastructure such as schools, hospitals and roads.” Nigeria’s Diaspora remittance in 2019 was put at $21bn by the World Bank. Even though the forecast showed that the remittance would have risen to $27.66bn in 2020, experts believe the projection couldn’t have been met due to the impact of the COVID-19 pandemic.
The CBN, which introduced a rebate of N5 for every $1 of fund remitted to Nigeria through International Money Transfer Organisations in its new forex policy, shared PwC’s forecast via its verified Tweeter handle on Saturday, saying increased remittances ‘can only be accomplished if the remittance infrastructure improves and if the right policies are put in place.’ As part of its reforms to boost the inflow of foreign currency in the country, the CBN on Saturday introduced an incentive of N5 for every $1 of fund remitted to Nigeria through International Money Transfer Organisations in its new forex policy.
The Central Bank Governor, Godwin Emefiele, disclosed this during a virtual event organised by Fidelity Bank at its inaugural webinar on the impact of the new forex policy on diaspora investments.
Emefiele said this new policy would take effect on March 8. He said, “Furthermore, in an effort to reduce the cost burden of remitting funds to Nigeria by working Nigerians in the diaspora, the Central Bank of Nigeria has introduced a rebate of N5 for every $1 of fund remitted to Nigeria, through IMTOs licensed by the Central Bank.
“This rebate will be provided to the bank accounts of beneficiaries, following receipt of remittance inflows.
“We believe this new measure will help to make the process of sending remittance through formal bank channels cheaper and more convenient for “Nigerians in the diaspora. This new policy is expected to take effect on the 8th of March 2021.” According to him, efforts at driving remittance inflows into Nigeria would yield positive results as it continued to ensure formal banking channels offer cheaper, faster and more convenient ways for remitters to send funds to beneficiaries.
He added, “Today, the World Bank data shows that Nigeria, with a total flow of $21bn, was the seventh largest recipient of remittances in 2019.
“This is behind India, China, and even Egypt. Though official remittance flows declined in 2020 due largely to the undermining impact of the Covid-19 pandemic, it maintained its dominance over FDI inflows.” Emefiele had earlier disclosed that remittances improved from a weekly average of about $5m to over $30m per week through its forex initiatives.
The CBN governor said reducing the cost of sending remittances was a significant way to boost remittance inflows to Nigeria.
In general, he said, the new policy was expected to enlarge the scope and scale of foreign exchange inflows into the country with a view to stabilisng the exchange rate and supporting accretion to external reserves. More importantly, it would provide an opportunity for Nigerians living abroad to make investments in their home country, he noted.
Emefiele said, “Yet, the introduction of the new policy presented new challenges as operators and remittance service providers were initially unable to integrate with the commercial banks.
“The CBN continues to work assiduously to resolve the few intermittent interface challenges that are remaining.”
He said it was brokering meetings between the IMTOs and banks in order to ensure that they had a smooth transition and the diaspora community had a more convenient way to remit funds to Nigeria. Explaining further, the CBN, on its verified Tweeter handle said, “The use of reimbursements of remittance fees has been critical in supporting improved inflow of remittances to countries in South Asia and in improving their balance of payments position following the COVID-19 pandemic.
“Consistent with the global trend, Nigeria aspires to ensure that remittances flows and diaspora investment becomes a significant source of external financing.
“Policy on the administration of remittance flows is aimed at increasing the transparency of remittance inflows, and providing Nigerians in the diaspora with cheaper and more convenient ways of sending remittances to Nigeria. “PwC forecasts suggest that Nigeria’s remittance flows could reach US$34.89bn by 2023. But this can only be accomplished if the remittance infrastructure improves and if the right policies are put in place.”
Reacting, a former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said this latest move would encourage people to patronise government licensed money transfer operators as opposed to the agents that could not be easily monitored.
It would also ensure that more FOREX was remitted into the country, he note.
SOURCE: PUNCH NIGERIA