Why diaspora remittances for Nigeria declined in 2016 —World Bank

Decline in the value euro, pound and Russian rubble against the dollar has been adduced as major reason for fall in the value of diaspora remittances to Nigeria again in 2016.

Latest edition of Migration and Development Brief, a publication of the World Bank released last week claimed that remittances to Nigeria from abroad fell by 10 per cent.

In 2015, diaspora remittances to the country stood at $21 billion and it made Nigeria sixth largest receiver of remittances in the world.

According to World Bank, “officially recorded remittances to developing countries was estimated at $429 billion in 2016, which a decline of 2.4 per cent over $440 billion in 2015.

Global remittance which include flows to high-income countries contracted by 1.2 per cent to $575 billion in 2016, from $582 billion in 2015.

The publication added that low oil prices and weak economic growth in the Gulf Cooperation Council (GCC) countries and the Russian Federation are taking a toll on remittance flows to South Asia and Central Asia, while weak growth in Europe has reduced flows to North Africa and Sub-Saharan Africa.

This caused a sharp decline in remittance flows.

India retaining its position as world’s largest remittance but it nevertheless recorded decline in inflows amounting to $62.7 billion in 2016, a decrease of 8.9 per cent over $68.9 billion in 2015.

Other major receiving countries were also estimated to have experienced reduction in remittances during the year under review include Bangladesh (-11.1 per cent), Nigeria (-10 per cent), and Egypt (-9.5 per cent).

The exceptions among major remittance recipients were Mexico and the Philippines, which saw inflows increase by an estimated 8.8 per cent and 4.9 per cent, respectively, last year.

“Remittances are an important source of income for millions of families in developing countries.

As such, a weakening of remittance flows can have a serious impact on the ability of families to get health care, education or proper nutrition,”

Acting Director of the World Bank’s Global Indicators Group, Rita Ramalho said In keeping with an improved global economic outlook, the Bank stressed that remittances to developing countries are expected to recover this year, growing by an estimated 3.3 per cent to $444 billion in 2017.

The global average cost of sending $200 remained flat at 7.45 per cent in the first quarter of 2017, although this was significantly higher than the Sustainable Development Goal (SDG) target of 3 per cent.

Sub-Saharan Africa, with an average cost of 9.8 per cent, remains the highest-cost region.

A major barrier to reducing remittance costs is de-risking by international banks, when they close the bank accounts of money transfer operators, in order to cope with the high regulatory burden aimed at reducing money laundering and financial crime.

This has posed a major challenge to the provision and cost of remittance services to certain regions.

The bank noted that several high-income countries that were host to many migrants were considering taxation of outward remittances, in part to raise revenue, and in part to discourage undocumented migrants.

However, taxes on remittances are difficult to administer and likely to drive the flows underground.