The Central Bank of Nigeria (CBN) has reported a significant increase of $172 million in direct remittances within a month. According to data, remittances amounted to $138.56 million in January, $39.14 million in February, $104.90 million in March, $193.31 million in April, and surged to $365.44 million in May 2024.
This data reveals a 90 percent increase from April to May and a 163 percent increase from January to May, reflecting robust growth in foreign-currency inflows. This development is a positive sign for the economy, particularly amid rising debt and efforts to diversify revenue sources.
The increase in remittances is attributed to the CBN’s efforts to enhance foreign currency remittance flows through formal channels. To address challenges hindering these flows, the CBN recently approved 14 new International Money Transfer Operators (IMTOs) in principle. This initiative aims to streamline processes and eliminate bottlenecks, encouraging more remittances through official channels.
Sidi Ali, the Acting Director of Corporate Communications at the CBN, emphasized 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 have 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 surge in remittances is crucial as Nigeria seeks to stabilize its economy amidst rising external debt obligations. Recent reports indicate that the Federal Government spent $2.18 billion on debt servicing between January and May 2024, highlighting the importance 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. Despite focusing on domestic borrowing, the Nigerian government 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.
Shadrach Israel, an economic expert at Lotus Beta Analytics, noted that the 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,” he said.
