IMF Blames Fall in Nigeria’s Remittance Flows on Forex Crisis

The uncertainty in Nigeria’s foreign exchange market contributed to the decline in diaspora remittance flows into the country, the International Monetary Fund has said.

The Director, African Department, IMF, Abebe Selassie, said this while responding to a question on why the country’s remittance flows dropped by 28 per cent in 2020, according to a document on Friday titled ‘Transcript of October 2021 Sub-Saharan Africa press briefing’.

The question was asked during the virtual IMF October 2021 Annual Meeting’s press conference on the ‘Regional Economic Outlook’ report for sub-Saharan Africa.

He said, “I think all remittances – in terms of what explains why – have declined. I would argue two factors. I mean one, of course, is the economic conditions, particularly last year and through the earlier part of this year, especially in many of the advanced countries and other countries where expatriate Nigerians are and send money back have not been very good. So, it is not surprising that remittances might have dropped.

“So, that’s one factor; but a second factor, I think, is the uncertainty in the foreign exchange market that has prevailed in Nigeria over the last year. I don’t think that it has been very conducive to remittances flowing as much as they were before or, indeed, being captured by the official financial sector.”

Selassie added, “So, I think that has been a second factor. Going forward, as long as the reforms on the foreign exchange market that are required to try and make sure that the country moves through having a single, unified foreign exchange market can take place, then this will help reduce uncertainty and it will increase confidence and allow more remittances to flow and be captured by the financial sector.

“I think that’s going to be a very important contributor. And so, the extent to which remittances we see being recorded increases will partly depend on this as well.”