Official Remittances to Nigeria Plummet by Almost 40% in a Year When Crypto Use Surged – Emerging Markets Bitcoin News

The Nigerian economy, one of Africa’s largest, has been hit by a wave of bankruptcies and closures of businesses and factories in the recent months, largely attributed to the naira’s devaluation over the past 12 months. The country’s economy grew strongly from 2000 to 2008, peaking at a growth of 19.4 percent in 2007. However, following a period of global recession and a fall in the price of oil, Nigeria entered its first recession in 25 years in Q1 of 2016, and the country’s GDP growth dropped to its lowest during the first quarter of 2009.

A new report by Nigerian social media platform, Sahara Reporters, has claimed that the country’s official remittances declined by 39.8 percent in the first half of 2018 when compared with the same period in 2017. According to the latest report by the National Bureau of Statistics (NBS), the official remittance which stood at N1.1 trillion in the first half of 2017 declined to N656.60 billion in the same period in 2018. The data reportedly states the total money sent home by Nigerians abroad in the first half of 2017 was N1.16 trillion.

According to the latest data from the World Bank, international remittances to Nigeria have dropped by almost 40 percent from $23.8 billion in 2019 to $17.2 billion last year. But despite this decline, remittances, which account for 4% of the country’s GDP, remain an important source of foreign currency for this oil-rich country.

Migrants avoid official channels

The data shows that since 2011, Nigeria has only recorded a total annual flow of remittances of less than $20 billion. This was the case in 2016, when a total of $19.7 billion in official remittances flowed into the Nigerian economy. However, this latest drop is only the second time in the last decade that remittances from Nigerians to foreign countries have declined.

This recent decline in remittances also coincided with the devaluation of the naira and the resulting shortage of foreign exchange this year. This devaluation, in turn, has forced many Nigerian expatriates to avoid official remittance channels.

Nevertheless, the Central Bank of Nigeria (CBN) eventually devalued the naira to its current rate of 1:420. However, the exchange rate remains below the parallel market rate of 1:480, Abokifx said. Besides the outright devaluation of the naira, the CBN has also ordered Nigerian financial institutions to stop serving the crypto industry. Still, the CBN’s plan to curb the use of cryptocurrencies seems to have failed, as evidenced by reports of the growth of peer-to-peer exchanges.

HPA’s strategy to halt the decline in remittances

During the same period, the CBN will launch an outreach programme to encourage Nigerians abroad to use official channels to send money home. As previously reported by News, Nigerian migrants who send money through the official corridors are entitled to the equivalent of $0.012 for every dollar they send.

Although the Nigerian financial authorities have declared the stimulus package a success, it remains to be seen whether its expansion will bring the value of remittances above $20 billion.

What do you think has caused the drop in the cost of remittances? You can share your thoughts below in the comments section.

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