Nigeria has regained its top remittance receiving country in the Sub Sahara part of Africa, according to a World Bank press release issued on November 17.
Policies of Nigeria that affect its remittances
The country has seen a rebound in remittances sent by the overseas Nigerians when compared to the same term last year. The World Bank report attributes this rebound to some monetary policies launched by the Nigerian authorities during the initial months of 2021. These measures were introduced to promote the use of authorized channels to send money to Nigeria. The country has been the largest remittance receiving country in this African region. The new government directives introduced incentives to encourage Nigerians to send and receive money across borders through the authorized systems.
Lower remittance cost
The report noted that the sending charge is highest here even though it came down to 8 percent from 8.9 percent at the starting months of 2021. The high sending cost can be due to low level of authorized remittances and the preference for exchange rates prevailing in the black market.
Nigeria’s central bank had announced a scheme on March 5 to boost remittances coming into the country. It offered 1.2 cents for each US dollar a Nigerian received. This scheme was only for 60 days that started on March 8 and ended on May 8. The goal was to encourage Nigerians receiving remittances to use official banking channels and avoid non-official routes like cryptocurrencies.
These schemes were implemented after international remittances received through formal routes declined. Nigerians were moving to cryptocurrency channels in large numbers to move money across borders. The black market exchange rate and not the government approved rate was being used to convert USD value to naira. The difference between parallel and official exchange rates was increasing. The report of World Bank shows the corrective measures have been successful in channeling most remittances through the official channels.