CBN reforms boost diaspora remittances by $172m in a month

The Central Bank of Nigeria has reported a $172m increase in direct remittances in one month.

The latest CBN data analysed by PUNCH Online showed that the remittances totalled $138.56m in January, $39.14m in February, $104.90m in March, $193.31m in April, and $365.44 m in May 2024.

The data indicates a surge of 90 per cent ($172m) from April to May, reaching $365.44m, and 163 per cent from January to May, indicating a robust growth in foreign-currency inflows, a positive development for the economy amid rising debt and efforts to diversify revenue sources.

This increase is reflective of efforts by the CBN to enhance foreign currency remittance flows through formal channels.

In response to challenges hindering remittance flows, the CBN recently approved in principle 14 new International Money Transfer Operators.

This initiative aims to streamline processes and eliminate bottlenecks, thereby encouraging more remittances through official channels.

The Acting Director of Corporate Communications at the CBN, Sidi Ali, emphasised 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,” she said.

Earlier regulatory changes also contributed to 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 strengthen the sector’s operational standards and financial requirements.

This current surge is pivotal as Nigeria seeks to stabilise its economy amidst rising external debt obligations.

Recent reports indicate that the Federal Government spent $2.18bn on debt servicing between January and May 2024, underlining 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.

The Nigerian government, despite focusing on domestic borrowing, 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.

As Nigeria continues to navigate economic reforms and external debt dynamics, the resilience of remittance inflows provides a crucial buffer against fiscal vulnerabilities.

An economic expert at Lotus Beta Analytics, Shadrach Israel, noted that a ” substantial increase in direct remittances to Nigeria 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.”