The World Bank has projected a significant increase in diaspora remittances to Nigeria in 2024, signaling a positive economic outlook for the country.
This anticipated growth comes at a critical time when providing much-needed foreign currency inflows is crucial, as Nigeria navigates several economic challenges. Although diaspora remittances to Nigeria have slowed in the last decade, the country has long benefited from significant diaspora remittances, averaging around $20 billion in foreign inflows over the past decade.
Recall that in June 2024, the World Bank reported that Nigeria emerged as a major recipient of diaspora remittances in Sub-Saharan Africa, capturing approximately 35% of the region’s total inflows in 2023. The report further revealed that the African country captured approximately $19.5 billion inflow last year, the highest in the region.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
In 2023, diaspora remittances to Nigeria however declined by 3 percent, totaling $19.5 billion, down from over $20 billion in 2022. According to the World Bank, this decline reflects a broader trend of a slower recovery from the impact of the coronavirus pandemic.
The Bank also reported that remittance flows to Low and Middle-Income Countries (LMICs), including Nigeria, grew modestly between 2022 and 2023, reaching an estimated $656 billion, a mere 0.77 percent increase. This is a stark contrast to the 8.3 percent growth seen between 2021 and 2022.
The World Bank further projects that things could turn around this year for remittance inflow to Nigeria. “The growth of remittance flows to LMICs is expected to recover to 2.3 percent in 2024 and 2.8 percent in 2025, to reach $690 billion in 2025”, the bank said.
Several key factors driving the World Bank’s optimistic forecast
Global Economic Recovery
As the global economy continues to recover from the disruptions caused by the COVID-19 pandemic, Nigerians living in countries such as the United States, the United Kingdom, and Canada is expected to experience improved financial stability. This recovery is likely to increase their capacity to send money back home, boosting overall remittance volumes.
The recovery of the job markets in the high-income countries has been the key driver of remittances, particularly as employment growth during the recovery was more rapid for immigrants.
Growing Nigerian Diaspora
The number of Nigerians emigrating in search of better economic opportunities has been steadily rising. The recent World Migration report shows that over 400,000 Nigerians live in the UK as of 2020 and 2023 reports revealed that over 300,000 visa applications to the UK were approved in 2023.
Between April 2023 and March 2024, 255,000 visa applications to the US have already been approved according to British High Commission in Nigeria. As this diaspora community expands and integrates into foreign labor markets, the volume of remittances is likely to increase correspondingly, providing greater support to families and communities in Nigeria.
In Nigeria, remittances from citizens abroad are a crucial financial lifeline, supporting a range of sectors from education and healthcare to infrastructure development and foreign exchange liquidity. In June, the Central Bank of Nigeria (CBN) announced a new policy allowing international money transfer operators (IMTOs) to access the official foreign exchange trading window, known as the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Under these new guidelines, IMTOs can conduct foreign exchange transactions directly through the CBN or via their Authorised Dealer Banks (ADBs), ensuring that recipients of international transfers receive payments at the prevailing exchange rate. This policy shift aligns with Central Bank of Nigeria (CBN) Governor Olayemi Cardoso’s plans to significantly increase diaspora remittances to the country.
Recall that earlier this year, Cardoso during the BusinessDay CEO forum themed Leadership in Tough Economic Times’ stated the apex bank’s ambition to ease issues in Nigeria’s financial sector.
“As a result of the challenges we have faced, one of the things we’ve done in the monetary side is said, look Diaspora remittances is very key and we set up a committee last time I went to Washington for the World Bank meetings, and I invited the INTOs. People flew in from all over the world to have a meeting and engage with me on this. At the end of that, we said based on the dialogue we have had, we are going to double the remittance flow within a year”, he said.
Economic Implications for Nigeria
The projected increase in remittances holds significant implications for Nigeria’s economy. These funds are crucial in enhancing household incomes, reducing poverty levels, and contributing to the overall economic stability of the nation.
Furthermore, remittances serve as an essential source of foreign exchange, which can help stabilize the Naira and support the country’s import needs. As Nigeria continues to navigate economic challenges, the expected growth in diaspora remittances in 2024 offers a positive outlook.