Cash from abroad slows: Nigeria’s remittance growth hits 3-year low

Growth in remittance flows to Nigeria, a crucial lifeline for millions, stumbled in 2023, reaching its weakest pace in three years, according to the World Bank.

Nigeria is expected to record a 2% increase in remittance inflows, reaching $20.5 billion by the end of 2023, according to the World Bank’s latest Migration and Development Brief released Monday.

It is the lowest pace of growth since 2019 and 2020 when remittances fell 2.1% and 27.6% respectively over the previous years.

Why this matters

Remittances are important to both Nigeria and the many families who receive them. They are anticipated to account for about 6% of Nigeria’s gross domestic product in 2023.

“Remittances are one of the few sources of private external finance that are expected to continue to grow in the coming decade. They must be leveraged for private capital mobilization to support development finance, especially via diaspora bonds,” said Dilip Ratha, lead economist and lead author of the report.

“Remittance flows to developing countries have surpassed the sum of foreign direct investment and official development assistance in recent years, and the gap is increasing.”

Slow global pace

The deceleration for Nigeria mirrors a broader trend across low and middle-income countries, where remittances are projected to grow an estimated 3.8% this year, significantly lower than the previous two years’ gains.

A global slowdown, marked by sluggish growth and inflation, is making it harder for people working in high-income countries to send money home. This is especially true for families in Sub-Saharan Africa, who rely heavily on remittances. While remittances from the United States stayed steady, other major senders like the Euro area still lag behind pre-pandemic levels, squeezing the flow of financial support.

The World Bank said remittances to low- and middle-income countries grew an estimated 3.8% in 2023 worldwide, estimated to have reached $669 billion, a moderation from the high gains of the previous two years.

The top five remittance recipient countries in 2023 are India ($125 billion), Mexico ($67 billion), China ($50 billion), the Philippines ($40 billion), and Egypt ($24 billion).

Remittance flows to Sub-Saharan Africa are expected to have increased by 2% — same as Nigeria – in 2023 to $54 billion by the end of the year, driven by strong remittance growth in Mozambique (48.5%), Rwanda (16.8%), and Ethiopia (16%).

Besides Nigeria, two other major recipients, Ghana and Kenya, posted estimated gains of 5.6% and 3.8%, respectively.

The World Bank projects that the pace of remittance flows to Sub-Saharan Africa will rise to 2.5% in 2024, reaching $55 billion.