IN the just concluded week, the World Bank stated that it expects inflow of diaspora remittance to Nigeria to drop by $2 billion to $21.7 billion in 2020, from the $23.8 billion it printed in 2019.
According to the World Bank report, the decline in remittances from Nigerians living abroad was amid COVID-19 pandemic and the attendant economic crisis which negatively affected most foreign countries.
Specifically, weak economic growth and employment levels in migrant–hosting countries as well as weak oil prices remained the major contributing factors. In the Washington-based institution report, titled ‘Migration and Development Brief 33’, the steepest drop in diaspora remittances is expected in Europe (by 16 per cent) and Central Asia (eight per cent), followed by East Asia, the Pacific and the Middle East, amongst others.
Despite the anticipated decline in remittances, the World Bank noted that it will still serve as an important source of external financing for Low and Middle-Income Countries (LMICs) given the quantum of inflow in 2019.
Remittance flows to LMICs was $548 billion in 2019, higher than foreign direct investment inflows (FDI) worth $534 billion. Nigeria was the seventh largest recipient amongst LMICs in 2019.
“We note that the projected decline in diaspora remittance is negative for the country’s currency pairs against others, particularly Naira/US$. Meanwhile, we expect the low-yield environment to be sustained despite the recent increase in credit to the government as excess liquidity continues to dominate the financial system,” analysts from Cowry Assets Management Limited said in a note to clients.