CBN explains how diaspora remittances increased from $6 million to $100 million weekly

The Central Bank of Nigeria (CBN) has said that its foreign exchange policies especially the Naira4Dollar scheme has led to significant improvement in diaspora remittances into the country.

The apex bank revealed that diaspora inflow into Nigeria increased from an average of $6 million weekly in December 2020 to an average of more than $100 million weekly by January 2022.

This was disclosed by the CBN Governor, Godwin Emefiele, while speaking at a special press briefing at the end of the Bankers’ Committee meeting, on Thursday, February 10, 2022, at the CBN Headquarters in Abuja.

What the CBN Government is saying about remittances

Emefiele in his statement noted that diaspora remittances fell significantly in the wake of the Covid-19 pandemic just as the foreign exchange earnings dropped greatly due to slump in exports and crash in oil prices.

He said, “This is understandable because to the extent that COVID-19 led to significant job losses in many advanced economies, diaspora remittances also suffered commensurate reductions in inflows into Nigeria.

“All these factors jointly explain the heightened pressures on the currencies of major emerging market countries, including Nigeria.”

The CBN Governor noted that the lessons that have been learnt from its policies on remittances, which were initiated due to the inadequacy of forex supply and constant pressure on the country’s exchange rate, can be applied in improving some aspects of the foreign exchange inflow into the country.

He listed the 4 major sources of forex inflow into Nigeria to include; Proceeds from oil exports, Proceeds from non-oil exports, Diaspora remittances and Foreign Direct/Portfolio Investments.

What you should know

• Recall that the CBN, in a circular to all Deposit Money Banks (DMB) and International Money Transfer Operators (IMTO), in March 2021, introduced a ‘Naira 4 Dollar Scheme’ for diaspora remittances,  which offers recipients of diaspora remittances through CBN’s IMTOs to be paid N5 for every $1 received as remittance inflow.
• It was introduced to encourage recipients of dollars to use formal banking channels and help the CBN capture such inflows to boost the liquidity of the forex market and ensure the stability of the Naira, which has been under pressure after the crash of oil prices last year due to the pandemic