Total Direct Remittances Reached $365m in May, 80% YoY Growth

Nume Ekeghe

Data realised by the Central Bank of Nigeria (CBN) has revealed that total foreign remittances for May 2024 amounted to $365 million, marking an 80 per cent year-on-year increase compared to May 2023, which recorded $202.89 million.

 According to analysts, the significant rise underscores the growing confidence and reliance on remittances as a vital source of foreign exchange for the Nigerian economy.

A deeper analysis of the data showed that for the first five months of 2024, Nigeria received a total of $841.37 million in remittances.

January started the year on a positive note with $138.56 million. However, February experienced a notable dip, recording the lowest influx of remittances at just $39.14 million, potentially reflecting seasonal variations or short-term economic factors affecting diaspora contributions.

The trend reversed in March, with remittances climbing to $104.9 million, suggesting a rebound in the flow of funds. This upward momentum continued into April, which saw remittances rise to $193.31 million. The surge peaked in May with an impressive $365.44 million, the highest monthly figure recorded so far this year.

According to market watchers, this substantial increase in May could be attributed to several factors, including improved economic conditions in countries where the Nigerian diaspora resides, enhanced remittance channels, and perhaps targeted financial policies by the CBN aimed at encouraging higher remittance inflows.

“The consistent rise in remittances highlights their critical role in supporting not only household incomes but also national economic stability. These funds often go towards education, healthcare, and business investments, contributing significantly to the socio-economic development of Nigeria.

“As remittance flows continue to grow, they present a resilient financial lifeline for many Nigerian families and a stable source of foreign currency for the nation. The CBN’s on-going efforts to streamline remittance processes and ensure favourable exchange rates are likely contributing factors to this positive trend, “said an expert who do not want his name in print.

At the last monetary policy committee meeting, the CBN Governor, Olayemi Cardoso said: “Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply in a freely functioning market system. The Committee also noted the marginal increase in the external reserve balance between March and April 2024 and urged the Bank to sustain its focus on accretion to reserves.

“The MPC commended the Bank for the recent approval of licenses of fourteen (14) international Money Transfer operators (IMTOs). This is expected to improve competition and lower the cost of transactions, thus attracting more remittances through formal channels.”

He added: “We have identified that this is a very critical element of the inflows coming into the country. It is estimated to represent about six per cent of our GDP. And so, we felt that it was important from the centre bank perspective, to have a strategy to engage this sector.

“Now within that; the IMTOs play a very major role, and so for us, it was important for us to meet them. We had a number of private discussions, understanding what their problems were, and seeing how we could help them to ensure that they are more effective in the things they do. And of course, we shared the challenges that we saw in the future for the country and that everybody had a role to play. And I must say that they responded very positively.

“Two aspects that concern them, one was the issue of the price, commissions, and the charges they are having to pay and of course, the issue of at some point in time the rates. And since the rates have converged, that has become less of an issue but they are encouraged to use your official channels to advance the cause of the very laudable efforts that we are making to enhance the flows of foreign currency coming in.

“I am very, interested in how we make progress on this and I’m certain that we will be successfully in doing it. Our target, is to double the remittance flow within a year. And as I said, we have started that process of engaging to ensure that it happens.”