By Chuks Emele
Pressure on Nigeria’s naira, caused by lower crude oil receipts, is being made worse by a sharp decline this year in diaspora remittances.
Funds sent from Nigerians abroad fell by as much as 40 percent in the first half of this years, compared with gains by Egypt, Kenya and Pakistan, according to data published by their central banks. These are countries that, like Nigeria, receive significant diaspora remittances.
Second-quarter fund transfers fell to 3.3 billion dollars, the lowest since 2008, underperforming the previous quarterly average of over 5.5 billion dollars.
In recent years remittances to Nigeria had grown steadily, showing a 10.5 percent year-on-year increase from 2017 to 2018 as it surged to 24.3 billion dollars, before declining to 23 billion dollars last year. The World Bank estimates this year’s figures will be drop by 2 billion dollars to 21 billion in 2020.
It’s not clear what impact the current multiple exchange-rate system would have on the year’s totals as funds captured in central bank data are those sent through official means, such as bank transfers or payment channels like Western Union, Money Gram and Remita.
People receiving funds transfers from any of these providers are offered exchange rates, of between 378 naira to 380 naira for each dollar. This compares with a range of 480 naira to 495 naira that prevailed in the parallel market at the end of Friday.
“Many people abroad are no longer happy to bring in money at the official rate again,” said Adamu Saidu, a currency trader based in Abuja. “Instead, they’re sending money to the parallel market to get the best rates.”
Even that hasn’t proved enough to meet demand in the parallel markets, where many, shut out by central bank’s exclusion of certain commodities from foreign currency allocation for imports, now resort to. The naira has continued to weaken in that segment.