* Global Diaspora fund transfer to hit $690bn by 2025
Diaspora remittance to Nigeria was $19.5 billion in 2023, constituting 35 per cent of such fund transfers to sub-Saharan Africa, although declining 2.9 per cent year-on-year, a new World Bank report has stated.
In the "Migration and Development Brief" the World Bank Group projected that global remittances are expected to grow by 2.3 per cent in 2024 and 2.8 per cent in 2025, to reach $690 billion next year.
The United States continued to be the largest source of remittances in the world, followed by Saudi Arabia and Switzerland, the report added.
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, said last week that Nigeria was expecting a doubling of its Diaspora remittance in the near future to boost its foreign exchange earnings.
The World Bank noted that remittances remain a crucial source of external finance for low-and middle-income countries (LMICS), hitting an estimated $656 billion in 2023.
In 2023, remittance flows to LMICS were supported by strong labour markets in the advanced economies, it said, particularly in the United States, which stands as the largest source country for remittances and the primary destination country for migrants.
By region, Sub-Saharan Africa saw a slight decline of 0.3 per cent in remittance flows, yet remittances continued to bolster the current accounts of several countries grappling with food insecurity and debt issues, it stressed.
In all, the top five recipient countries for remittances in 2023 were: India, with an estimated inflow of $120 billion, followed by Mexico ($66 billion), China ($50 billion), the Philippines ($39 billion), and Pakistan ($27 billion).
In smaller economies, the report said remittance inflows represent very large shares of Gross Domestic Product (GDP), highlighting their importance for funding the current account and fiscal shortfalls.
"Looking ahead, remittances are expected to grow by 2.3 per cent in 2024 and 2.8 per cent in 2025, to reach $690 billion by 2025. In contrast, Foreign Direct Investment (FDI) flows, which have steadily decreased since 2012, are unlikely to recover strongly," the global financial institution stated.
Remittance flows to low- and middle-income countries grew by 0.7 per cent to reach $656 billion in 2023 and continued to be the premier source of external finance for LMICs during 2023, surpassing foreign direct investment, it said.
Sending remittances, it noted, remained too costly due to limited competition among providers and inadequate cross-border inter-operability.
In the Q4 of 2023, the global average cost of sending $200 was 6.4 per cent of the amount being sent, slightly up from 6.2 percent a year earlier and well above the Sustainable Development Goal (SDG) target of 3 per cent, the bank added.
Digital remittances had a lower cost of 5 per cent, compared with 7 per cent for non-digital methods, highlighting the benefits of technological advancements in reducing migrants' financial burden.
Based on new census data and national statistics, the stock of international migrants, the bank said, is estimated to have been 302 million in 2023. The top destination countries are the United States, Germany, Saudi Arabia, Russia, and the United Kingdom.
"Remittance flows to Sub-Saharan Africa reached $54 billion in 2023, a slight decrease of 0.3 per cent. The projected moderate growth in remittances reflects the expected slower growth in the United States while a feeble rebound is expected in flows from Europe.
"Countries heavily dependent on remittances include the Gambia, Lesotho, Comoros, Liberia, and Cabo Verde. Flows are projected to grow by 1.5 per cent in 2024. Sending $200 to the region cost an average of 7.9 per cent, almost unchanged from a year before," it pointed out.
In 2023, remittance flows were affected by a combination of structural and cyclical factors in the source and recipient countries, including job markets for migrant workers in the source countries, immigration policies that affect the flow of migrant workers and their transit routes.
Others were their employment prospects; exchange rate movements of major source-country currencies against the US dollar; the prevalence of multiple exchange rates in recipient countries; as well as war and conflict.
"The largest recipients of remittances in the region during 2023-measured in US dollar terms include Nigeria, Ghana, Kenya, and Zimbabwe. Remittances have become the most important foreign exchange earner in several countries.
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"The regional growth in remittances in 2023 was largely driven by strong remittance growth in Uganda (15 per cent to $1.4 billion), Rwanda (9.3 per cent to $0.5 billion), Kenya (2.6 per cent to $4.2 billion), and Tanzania (4 per cent to $0.7 billion).
"Remittances to Nigeria, accounting for around 35 per cent of total remittance inflows to the region, decreased by 2.9 per cent to $19.5 billion," the global bank added.
For growth of remittances to Sub-Saharan Africa, the World Bank projected it to recover slightly from negative growth of -0.3 per cent in 2023 to +1.5 per cent in 2024.
Risks to the outlook, it said, include lower-than-expected growth in developed countries that will lead to a decline in remittances sent by the African Diaspora and an escalation of the conflict in Israel-Gaza that could disrupt the supply chain.
It further listed security risks in Burkina Faso, Chad, the Democratic Republic of Congo, Mali, Mozambique, and Nigeria as well as climate risks as other factors that could impact the expected remittance.
