Nigerians abroad to remit $21bn in 2013 -World Bank

Posted by African Examiner Business News, Featured, News Friday, October 4th, 2013

By Eric Ojo

Remittances from Nigerians currently in the Diaspora have been estimated to increase up to $21 billion (N3.28 trillion) for the 2013 fiscal year, a World Bank report has said.

Nigeria, the most populous nation in the African continent, has a strong and growing Diaspora community, especially in the United States, Europe and Asia and even in some fast growing economies across Africa, many of whom are responsible for the remittance flows.

The country which is so superfluously blessed with abundant natural and human resources was among the top 10 recipients of migrant remittances in 2011 with $11bn remitted by her teeming citizens in Diaspora.

The report which was prepared by the Migration and Remittances Team of the World Bank’s Development Prospects Group, also projected that developing countries would receive over $410 billion in remittances this year, adding that remittances to the developing world are expected to grow by 6.3 per cent this year to $414 billion and are projected to cross the half-trillion mark by 2016.

The report which was contained in a statement issued on Wednesday, further disclosed that Global remittances, including those to high-income countries, are estimated to touch $550 billion this year, and reach a record $707 billion by 2016, adding that India and China alone will represent nearly a third of total remittances to the developing world this year.

“The estimates reflect recent changes to The World Bank Group’s country classifications, with several large remittance recipient countries, such as Russia, Latvia, Lithuania and Uruguay no longer considered developing countries. In addition, the data on remittances also reflects the International Monetary Fund’s changes to the definition of remittances that now exclude some capital transfers, affecting numbers for a few large developing countries like Brazil.

“These latest estimates show the power of remittances. For a country like Tajikistan they constitute half the Gross Domestic Product (GDP). For Bangladesh remittances provide vital protection against poverty. In terms of volume, India, with $71 billion of remittances, tops the global chart. To put this in perspective, this is just short of three times the Foreign Direct Investment (FDI) it received in 2012”, the report added.

Lending credence to this, Senior Vice President and Chief Economist of the World Bank, Kaushik Basu noted that remittances act as a major counter-balance when capital flows weaken as happened in the wake of the US Fed announcing its intention to reign in its liquidity injection programme. Basu added that when a nation’s currency weakens, inward remittances rise and, as such, they act as an automatic stabilizer.

Meanwhile, growth of remittances has been robust in all regions of the world, except for Latin America and the Caribbean, where growth decelerated due to economic weakness in the United States. The top recipients of officially recorded remittances for 2013, according to the report, are India (with an estimated $71 billion), China ($60 billion), the Philippines ($26 billion), Mexico ($22 billion), Nigeria ($21 billion), and Egypt ($20 billion).

Other large recipients, the report said, include Pakistan, Bangladesh, Vietnam, and Ukraine, adding that as a percentage of GDP, the top recipients of remittances, in 2012, were Tajikistan (48 per cent), Kyrgyz Republic (31 per cent), Lesotho and Nepal (25 per cent each), and Moldova (24 per cent).

Also his contribution, the Manager, migration and remittances team at the bank’s Development Prospects Group, Dilip Ratha said remittances are the most tangible and least controversial link between migration and development.

“Policymakers can do much more to maximize the positive impact of remittances by making them less costly and more productive for both the individual and the recipient country”, the Manager further stated.

Ratha also observed that the high cost of sending money through official channels continues to be an obstacle to the utilization of remittances for development purposes, as people seek out informal channels as their preferred means for sending money home.

The report equally pointed out that global average cost for sending remittances is 9 per cent, broadly unchanged from 2012, noting that while remittance costs seem to have stabilized, banks in many countries have begun imposing additional ‘lifting’ fees on incoming remittances. Such fees, it added, can be as high as 5 per cent of the transaction value.

It further disclosed that some international banks are also closing down the accounts of money transfer operators because of money laundering and terrorism financing concerns.

“These developments mark an unwelcome reversal of recent gains in the facilitation of cross-border remittances by migrants and this runs contrary to the G20 commitment to lower remittance costs. The world development community, as it debates the post-2015 agenda, also needs to turn its attention to the high cost of migration, including recruitment costs and fees for visas, passports and residency permits”, Ratha further observed.

In addition, the World Bank Group is committed to continuing its engagement on this important aspect of development, as evidenced by the recent establishment of the Global Knowledge Partnership on Migration and Development (KNOMAD), which is envisaged as a hub of knowledge and policy expertise on migration.

KNOMAD’s work program focuses on the following 12 key thematic areas including skilled and unskilled labor migration; integration issues in host communities; policy and institutional coherence; migration, security and development; migrant rights and social aspects of migration; and Internal migration and urbanization. KNOMAD will also address cross-cutting themes of gender, monitoring and evaluation, capacity building, and public perception and communication.

Drawing on global expertise, KNOMAD’s outputs will be widely disseminated and will be available as global public goods.