Nigeria’s Remittances Surge 163% in Five Months, Says CBN

The Central Bank of Nigeria (CBN) has reported a substantial increase in direct remittances, recording a 163% surge over the past five months.

The data reveals that remittances totaled $138.56 million in January, $39.14 million in February, $104.90 million in March, $193.31 million in April, and $365.44 million in May 2024.

This dramatic rise from April to May alone accounted for a 90% increase, amounting to an additional $172 million, culminating in a robust total of $365.44 million.

The CBN attributes this growth to strategic initiatives aimed at enhancing foreign currency remittance flows through formal channels.

The CBN has taken decisive steps to respond to various challenges that previously hindered these flows, including the in-principle approval of 14 new International Money Transfer Operators (IMTOs).

This move is designed to streamline processes, eliminate bottlenecks, and encourage more remittances through official avenues.

Sidi Ali, the Acting Director of Corporate Communications at the CBN, emphasized the bank’s commitment to facilitating smoother remittance transactions.

“We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. We have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry,” Ali stated.

The recent regulatory changes also played a pivotal role in this positive trend. In January 2024, the CBN removed the exchange rate cap previously imposed on IMTOs, allowing for more flexible currency quoting.

This regulatory adjustment was complemented by revised operational guidelines and increased licensing fees for IMTOs, underscoring the CBN’s efforts to bolster the sector’s operational standards and financial requirements.

This surge in remittances comes at a crucial time as Nigeria seeks to stabilize its economy amidst rising external debt obligations.

Recent reports indicate that the Federal Government spent $2.18 billion on debt servicing between January and May 2024, highlighting the significance of foreign exchange earnings from remittances.

The increase in remittance inflows aligns with broader economic strategies aimed at diversifying revenue sources away from oil-dependent revenues.

Despite focusing on domestic borrowing, Nigeria faces substantial external debt servicing obligations.

This fiscal challenge underscores the critical role of remittances in bolstering foreign exchange reserves and mitigating external debt pressures.

The CBN’s proactive measures and collaborations with IMTOs are expected to sustain this positive momentum in remittance inflows.

An economic expert at Lotus Beta Analytics, Shadrach Israel, noted that the substantial increase in direct remittances underscores the effectiveness of recent regulatory reforms and strategic initiatives by the CBN.

“These efforts not only enhance the transparency and efficiency of remittance channels but also contribute significantly to Nigeria’s economic resilience amidst evolving global economic landscapes,” Israel said.