Diaspora remittances set to soar to $35bn a year with new flexible foreign exchange rules

REMMITANCES from Nigerians in diaspora are set to soar to an unprecedented $35bn from the current $21bn as a result of the new flexible foreign exchange regime introduced by the government.

 

According to the World Bank Migration and Remittances Factbook 2016, Nigerians living abroad sent home $20.8bn in 2015, representing the largest volume of remittances to any country in Africa and the sixth largest in the world. Historically, Nigeria's naira has been pegged to the US dollar but with dwindling oil prices, the government has decided to make the foreign exchange regime more flexible.

 

Central Bank of Nigeria (CBN) governor Godwin Emefiele, said that the decision to allow the naira to float freely has been welcomed by investors. He added that a cheaper currency will boost Nigeria’s attractiveness in the eyes of foreign investors.

 

Aminu Gwadabe, the president of the Association of Bureau De Change Operators of Nigeria (Abcon), added that the implementation of the new flexible foreign exchange regime is expected to raise the annual diaspora remittances too.  He said that with the new forex regime in place, many Nigerians in the diaspora are likely to send home more dollars to benefit from improved rates on the parallel market.

 

Mr Gwadabe added: “The new rates will be attractive to Nigerians in the diaspora. We will continue to insist that the diaspora funds should be managed by bureaux de change operators because such funds fall within the service end of the market.”

 

According to the World Bank, the US is the biggest source of remittances to Nigeria, followed by the UK. Nigerians received $5.7bn in remittances sent from friends and family members in the US and $3.7bn from the UK in 2015.

 

International remittances to developing countries reached over $441bn in 2015, more than foreign direct investment and trice more than official aid flows. According to the World Bank, 34% of all international remittances are sent between developing countries.

 

It disclosed that remittances constitute more than 10% of gross domestic product for 25 countries. In addition, the World Bank states that international remittances have been growing steadily and remain stable even during episodes of financial volatility.