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Tuesday, June 6, 2023

Nigeria Receives $20.9bn Remittance Flows for 2022, Highest in Sub-Saharan Africa

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Remittance flows to Nigeria will rise 7.5% to reach $20.9 billion this year, according to a World Bank report published Wednesday.

That puts its inflows far ahead of other countries in Sub-Saharan Africa (SSA) including Ghana ($4.7 billion), Kenya ($4.1 billion) and Senegal ($2.7 billion).

Nigeria is the largest recipient of remittances in the region (SSA), although it came in second for Africa as a whole, behind Egypt ($32.3 billion) which is grouped under the Middle East and North Africa (MENA), region.

Nigeria which witnessed a sharp recovery in flows during 2021 (13.2 percent), maintained the improved momentum of 2021 into to the first quarter of 2022.

However, growth fell in Q2 data to 0.5 percent vis-à-vis the same period of 2021.

Moreover, the country is reaping little benefit from the surge in crude oil prices, while the expatriate community faces real income losses in the United States, the United Kingdom, and the Euro Area.

Financial flows to Africa have been exceptionally volatile over the longer term and continuing into the 2020s, particularly for foreign direct investment (FDI) and portfolio flows.

Remittances are expected to constitute 38 percent of total flows in 2022, with official development assistance (ODA) standing at 53 percent.

Remittance flows to Africa have maintained secular growth of a favorable 12.5 percent over 2000–22, contrasted with 7 percent gains for FDI, and 8 percent for ODA.

Subject to less volatility than other sources of foreign inflows, remittance receipts have offered a degree of support for overall financial flows.

The largest recipients of remittances in the region during 2022—measured in US dollar terms—include Nigeria, Ghana, Kenya, and Senegal.

Those countries more dependent on receipts as a proportion to GDP include the Gambia, Lesotho, Comoros, and Cape Verde.

Relative rankings of the top 10 recipients have changed little in recent years, though the Gambia has moved up in the remittances/GDP group given the dramatic political-economy changes there in recent years.

Notably, Ghana receives the second-largest remittance inflow in dollar terms and the ninth-largest level in relation to GDP.

Sub-Saharan Africa remains the most expensive region to send money to. Senders had to pay 7.8 percent to send $200 to African countries during Q2 2022.

Remittance outlook

Risk of further adverse developments in the external environment will persist through 2023, and act to lower the pace of remittance flows to Africa to 3.9 percent.

Price pressures for wheat, oil, and fertilizers are likely to continue into 2023, although ebbing from peaks of the previous year.

Food affordability and deterioration of real incomes across African states will place a damper on economic growth, while government spending on subsidies and support for farmers will widen fiscal gaps.

Nigeria is anticipated to see continued moderation in flows to a 4.5 percent pace in 2023 from 7.5 percent in the current year. Kenya should experience a modest slowing to gains of 5.5 percent.


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