Nigeria, others witness rebound in remittance flows, says World Bank

The World Bank Group has estimated that Nigeria remittances inflow will hit $18 billion in 2021 out of the $45 billion remittances projected for sub-Sahara Africa (SSA).

Indeed, it stated that remittance inflows to Sub-Saharan Africa returned to growth in 2021, increasing by 6.2% to $45 billion.

This is even as remittances to low- and middle-income countries are projected to have grown a strong 7.3% to reach $589 billion this financial year.

In its latest report on top Remittance Source and Recipient Countries, the Bank said: “Nigeria, the region’s largest recipient, is experiencing a moderate rebound in remittance flows, in part due to the increasing influence of policies intended to channel inflows through the banking system.”

For SSA in general, it noted that “After contracting by 14.1 per cent in 2020, remittance flows to Sub-Saharan Africa are expected to recover in 2021—registering a growth of 6.2% to reach $45 billion.”

Data reveal that costs tend to be higher when remittances are sent through banks than through digital channels or through money transmitters offering cash-to-cash services.

High costs

However, despite the rebound in the region as well as in other regions of the world, following recoveries from the impact of the global COVID-19 pandemic, remittances costs remain high and vary according to regions.

Indeed, Sub-Saharan Africa pays the highest to send money across to their home countries at 8%, compared to South Asia, which pays the lowest with 4.6%.

 “This is more than double the Sustainable Development Goal target of 3% by 2030,” the report said.

“The cost of sending $200 across international borders continued to be too high, averaging 6.4% of the amount transferred in the first quarter of 2021, according to the World Bank’s Remittance Prices Worldwide Database.

“Data reveal that costs tend to be higher when remittances are sent through banks than through digital channels or through money transmitters offering cash-to-cash services.”

This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7% despite a severe global recession due to COVID-19, according to estimates from the World Bank’s Migration and Development Brief.

Furthermore, it said that for a second consecutive year, remittance flows to low- and middle-income countries (excluding China) are expected to surpass the sum of foreign direct investment (FDI) and overseas development assistance (ODA).

“This underscores the importance of remittances in providing a critical lifeline by supporting household spending on essential items such as food, health, and education during periods of economic hardship in migrants’ countries of origin,” it added.

Commenting on their significance, World Bank Global Director for Social Protection and Jobs, Michal Rutkowski, said: “Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the COVID-19 crisis.

“Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic.”

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