Nigerian remittances trending upward, set to reach highest level in 4 years

Business a.m

Remittances sent by Nigerians living abroad are expected to reach a record high of $20.5 billion in 2023, a two per cent increase from the previous year, marking the fourth consecutive year of growth in remittance flows to Nigeria, according to a report by the World Bank.

The report, titled “Migration and Development Brief”, showed that  Nigeria is a key destination for migrants from the sub-Saharan region, and as a result, accounts for 38 percent of the remittance flows to the region.

The “Migration and Development Brief” notes that remittance flows to sub-Saharan Africa are expected to have increased by 1.9 percent in 2023, reaching $54 billion. This growth is primarily driven by strong increases in remittance flows to Mozambique (48.5 %), Rwanda (16.8 %), and Ethiopia (16 %). In addition, two major recipients, Ghana and Kenya, are estimated to have seen increases of 5.6 percent and 3.8 per cent, respectively.

According to the “Migration and Development Brief”, fixed exchange rates and capital controls are having a negative impact on remittance flows to the sub-Saharan region, as they are driving remittances away from official channels and into the informal sector. This is due to the fact that official channels are often limited and have higher costs associated with them, while informal channels offer more flexibility and lower costs. As a result, remittance flows are being diverted away from official channels, reducing the amount of money that is available for investment and economic development. 

“In 2024, remittance flows to the region are projected to increase by 2.5%. Sending $200 to the region cost 7.9 per cent on average in the second quarter of 2023,” the world Bank report stated. 

The report highlighted that the United States remains the largest source of remittances globally, sending $115 billion in 2023. The top five remittance recipient countries in 2023 were India ($125 billion), Mexico ($67 billion), China ($50 billion), the Philippines ($40 billion), and Egypt ($24 billion). In terms of GDP, the countries with the highest share of remittance inflows include Tajikistan (48%), Tonga (41%), Samoa (32%), Lebanon (28%), and Nicaragua (27%). 

The World Bank estimates that remittances to low- and middle-income countries in 2023 reached $669 billion, supported by resilient labour markets in advanced economies and Gulf Cooperation Council (GCC) countries. The growth was seen to  be driven by strong labour demand in these economies and the resilience of global migration flows, despite the challenges posed by the COVID-19 pandemic and other global economic disruptions.