A new finding by FBNQuest Research released on Friday has revealed that net workers’ remittances in the second quarter (Q2) of 2019 were a larger inflow on the balance-of-payments than either net foreign portfolio investment of US$4.45billion or net Foreign Direct Investment (FDI) of just US$0.53billion. The report emphasized that this has been the case for at least four years.
According to the report, net current transfers declined by 2per cent when compared yearly (y/y) to US$5.93bllion in Q2 2019, and by 22 per cent when compared quarterly (q/q). This steep fall was the result of net other transfers of US$1.59billion in Q1, which item had been negative every quarter back to Q1 2008.
FBNQuest Research further showed that this item balanced the widening of the trade surplus, resulting in a flattish deficit on the current account. Net workers’ remittances improved marginally from US$5.85billion in Q1 to US$5.92billion in Q2.
They generally peaked in the fourth quarter to coincide with the Christmas holiday season, it stated.
According to the investment banking arm of First Bank Nigeria, the trend for remittances has been broadly positive since the CBN’s exchange-rate reforms of March/April 2017, suggesting that new and cheaper mobile-based methods of transfer should underpin the trend.
It further recommends that given the scale of these remittances, a federal or even a state government strategy for the diaspora would be welcome. India and its Kerala state offer examples and that in line with the CBN’s heterodox foreign-exchange policies, a preferential rate would be one possibility.
The other transfer in Q1 was a financing scheme, we assume from a development agency and probably for the health sector, in favour of NPISH (non-profit institutions serving households).