LAGOS, Nigeria (VOICE OF NAIJA)-The World Bank has called on Nigeria and other nations with significant diaspora remittances to harness these funds to alleviate poverty and finance essential needs within the country.
This was revealed in the World Bank’s latest Migration and Development Brief, which reported that diaspora inflows to Nigeria amounted to $19.5 billion, slightly below the projected $20 billion.
However,Nigeria’s inflows were the highest in the sub-Saharan African region, making up 35 percent of the total. The report also observed that the decline in remittances was a trend seen in other regions.
Despite this reduction, remittances continued to surpass Foreign Direct Investment (FDI) and Official Development Assistance (ODA).
The World Bank expects this trend to expand in the coming years due to migration pressures from demographic shifts, income disparities, and climate change.
“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,” the report said.
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Sub-Saharan Africa faces the highest remittance costs globally, averaging 7.9 percent.
According to the World Bank, these costs encompass various fees, including bank charges, money transfer operator fees, and stamp duties, among others.
The report also noted that the fees imposed on senders (and occasionally recipients) are frequently hidden 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.
Earlier this year, during a panel discussion at the 2024 Economic Outlook and Budget Analysis organized by the Lagos Chamber of Commerce and Industry, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, noted that although the World Bank estimated $20 billion in diaspora remittances to Nigeria in 2023, the majority of these funds did not actually enter the country.
“The World Bank said for 2023 our diaspora remittances was about $20bn. We estimate that more than 90 per cent of that did not get to Nigeria. They were being externalised.
“We have spoken to loads of Nigerians almost everywhere and they told us how they send money now. They use digital apps. We have the list of those apps. They use parallel market rates. So, they credit naira here in Nigeria without bringing the dollars,” he said.
Meanwhile, the Central Bank of Nigeria has provisionally approved 14 International Money Transfer Operators in an effort to bolster remittance flows into the country through formal channels.