Nigeria’s diaspora remittances rose to $19.5 billion in 2023, according to the latest Migration and Development Brief from the World Bank.

Despite falling slightly short of the projected $20 billion, this figure remains the highest in the sub-Saharan African region, accounting for 35% of the total remittances received in the area.

The report highlights the critical role remittances play in supporting the Nigerian economy, surpassing foreign direct investment (FDI) and official development assistance (ODA) in terms of financial inflow.

The World Bank’s report underscores the importance of leveraging remittances to combat poverty and finance key needs such as health, education, and financial inclusion.

While acknowledging that remittances cannot replace FDI or ODA, the report emphasizes the resilience and significant impact of these funds in supporting the country’s economic stability and development.

“Developing countries need FDI, especially in critical infrastructure and green investments, and ODA to address public financing needs and externalities such as fragility and climate change,” the report stated.

“However, countries must recognize the size and resilience of remittances and find ways to leverage these flows for poverty reduction and other key areas.”

Despite the high volume of remittances, sub-Saharan Africa continues to face the highest remittance costs globally, averaging 7.9%.

These costs encompass bank charges, money transfer operator fees, and various duties, which can reduce the net amount received by beneficiaries.

Also, the report notes that non-transparent foreign exchange markups often mask these fees, further impacting the final amount received.

The report also pointed out that in countries with multiple exchange rates, remittances often flow through unregulated channels, depriving recipient countries of vital foreign exchange.

This practice is prevalent in Nigeria, where many remittances are sent through informal routes, avoiding the official exchange rates and contributing to the externalization of funds.

Earlier this year, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, highlighted the discrepancy between reported remittances and actual inflows during a panel discussion at the 2024 Economic Outlook and Budget Analysis organized by the Lagos Chamber of Commerce and Industry.

Oyedele noted that while the World Bank estimated Nigeria’s diaspora remittances at $20 billion for 2023, more than 90% of these funds did not enter the country formally.

“We have spoken to many Nigerians almost everywhere, and they told us how they send money now. They use digital apps that utilize parallel market rates, crediting naira in Nigeria without bringing in the dollars,” Oyedele explained.

The World Bank has urged Nigeria to capitalize on its diaspora remittances to combat poverty and finance critical development needs.

In its latest Migration and Development Brief, the international lender highlighted that Nigeria’s diaspora inflow stood at $19.5 billion in 2023, the highest in the sub-Saharan African region, representing 35% of the total inflows.

Despite the figure falling slightly short of the projected $20 billion, the World Bank explained the importance of these funds, noting that remittances outpaced Foreign Direct Investment (FDI) and Official Development Assistance (ODA) in many developing countries.

This trend, driven by migration pressures, demographic changes, income disparities, and climate change, is expected to continue.

The World Bank report stressed that while remittances should not replace FDI or ODA, they offer a resilient source of funds that can be leveraged for poverty reduction, health and education financing, financial inclusion, and improved access to capital markets.

The bank urged countries like Nigeria to recognize the size and stability of remittance flows and to develop strategies to harness these funds effectively.

“Given the multiparty arrangement in the new government, we see some upside potential for reforms, which could accelerate given greater accountability and oversight,” Goldman Sachs International Inc. economist Andrew Matheny stated. “However, the coalition might ultimately prove fragile.”

The report highlighted the high cost of remittances to sub-Saharan Africa, averaging 7.9%, which includes bank charges, money transfer operator fees, and other levies.

It also pointed out that in countries with multiple exchange rates, remittances often flow through unregulated channels, depriving the recipient country of access to foreign exchange.

Earlier this year, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, noted that while the World Bank estimated Nigeria’s diaspora remittances at $20 billion for 2023, more than 90% of these funds did not physically enter the country.

“We have spoken to many Nigerians almost everywhere, and they told us how they send money now. They use digital apps. They use parallel market rates. So, they credit naira here in Nigeria without bringing the dollars,” Oyedele explained during a panel discussion at the 2024 Economic Outlook and Budget Analysis organized by the Lagos Chamber of Commerce and Industry.

In response to these challenges, the Central Bank of Nigeria has granted preliminary approval to 14 International Money Transfer Operators to strengthen formal remittance channels.

The World Bank’s call to action underscores the critical role that diaspora funds can play in Nigeria’s economic development.

By implementing policies to effectively leverage these inflows, Nigeria can address key issues such as poverty, healthcare, education, and infrastructure, ultimately fostering a more inclusive and sustainable economic growth.

The International Monetary Fund (IMF) has approved the immediate disbursement of $360 million to Ghana following the country’s successful debt restructuring agreement with its official creditors.

This new tranche brings the total disbursement to $1.56 billion since Ghana entered into a $3 billion three-year program with the IMF in May 2023.

The IMF’s decision, announced after an executive board meeting on Friday, follows a staff-level recommendation made in April, which stipulated the release of funds contingent upon Ghana securing a memorandum of understanding with its bilateral lenders.

Ghana met this condition on June 11 by agreeing to restructure $5.1 billion in debts.

The infusion of funds will bolster the Bank of Ghana’s efforts to stabilize the cedi, which has depreciated by nearly 22% against the dollar this year, positioning it as the fourth-worst performing currency among those tracked by Bloomberg.

“This agreement on a debt treatment, consistent with program parameters, provided the financing assurances necessary for the second review under the extended credit facility arrangement to be completed,” the IMF stated.

Ghana’s journey to financial stabilization includes the reorganization of nearly all its $43 billion debt under the Group of 20’s Common Framework.

In addition to the official creditors’ agreement, Ghana also reached a preliminary accord with private creditors to restructure $13 billion in eurobonds.

This marks a significant step in the comprehensive debt restructuring process that began 18 months ago.

The IMF noted that Ghana’s performance under the program has been generally strong, despite the challenging economic environment.

“The medium-term outlook remains favorable but subject to downside risks — including those related to the upcoming general elections,” the IMF cautioned.

Ghana is set to hold presidential and parliamentary elections on December 7, raising concerns about potential election-related budget overruns.

The IMF emphasized the importance of maintaining fiscal discipline to ensure the program’s success and the country’s economic recovery.

The G-20 framework, which now includes sovereign creditors such as China, aims to ensure fair sharing of debt restructuring losses between bond investors and bilateral lenders.

Ghana’s agreement with private creditors is consistent with these principles but requires confirmation on comparability of treatment by the official creditor committee.