“Since I became the CBN governor, I have been hearing about the size of diaspora remittances; some say $20 billion, in fact some say it’s about $30 billion. Honestly, I have been looking for the $30 billion or $20 billion, I have not seen it.
“But this time, I have decided that I will focus to see those billions of dollars. You know what, I am not only expecting $20 billion, if we get even up to $10 billion to $15 billion, I can tell you it can help the Nigerian economy.
“Pakistan, Indonesia and others generate an average of $2 billion monthly in diaspora remittances and this has helped to reduce the impact of COVID-19 on their economy,” Central Bank of Nigeria Governor, Godwin Emefiele (source).
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Then, “the CBN Governor, Godwin Emefiele, recently said that weekly diaspora remittances rose from $5m to $30m. He noted that the initiatives introduced by the CBN to boost foreign exchange in the country were yielding results.” Yet, the numbers are way off the soundbites. At that rate, you get less than $2 billion in a year.
So, where is the extra $18 billion? They are there: peer to peer remittance; the official traditional remittance channels are being disintermediated. CBN’s problem is not Nigeria but US tax systems which make peer-to-peer preferable. Try to remit $10,000 from the US to Nigeria. You will share your social security number and practically everything about your life.
Next time, the same person may just prefer to wire that money to somebody in the US who will credit him in Nigeria. With that, no remittance in CBN books but remittance has actually taken place. To fix remittance, it is what happens in Nigeria that matters to the diasporas, it is what they have to prove before that money lives US when the amount is significant.
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Bros Godwin has been bamboozled by Nigeria’s mysterious numbers. Who even did the counting and analysis and arrived at the magic number of $25 billion remittances? This economy doesn’t look like what receives annual injection of additional amount of that size, but it has been bandied around for a while, and therefore became christined as reality.
Yes, there are several unofficial means of remitting money to Nigeria, but are they really as high as numbers mentioned? This is an economy with maximum activities hovering around 400 billion dollars, for population of over 200 million people, yet it’s hard to pin down how the precious twenty five billion dollars travel and its landing spots; some things may never be clearer.
While Emefiele yearns for more remittance dollars to keep the economy kicking, I think special attention should be paid to proliferation of innovative start-ups. With well orchestrated framework, they can be receiving billions of dollars in funding, and dollars will become abundant in the land.
This is where policy priorities come in, are we more interested in cutting dollar-denominated spending or creating environment that will make Nigeria top investment destination for start-ups? It’s about choices.