Despite the Central Bank of Nigeria’s (CBN) efforts to boost foreign exchange reserves, total direct FX remittances dropped by 6.28% Year-on-Year (YoY) to $282.6 million in the first quarter (Q1) ended March 31, 2024. This decline was reported by the CBN’s “International Payments” data, which indicated a decrease from $301.57 million in the first quarter of 2023.
Breaking down the figures, the CBN revealed that total direct remittances stood at $138.56 million in January 2024, marking a 75% increase from $79.19 million in January 2023. However, there was a significant decline in February 2024, with remittances totaling $39.15 million, down by 53.26% from $83.76 million in February 2023. In March 2024, remittances further decreased to $104.91 million, representing a 24.3% decline from the $138.63 million reported in March 2023.
Mr. David Adnori, Vice President of Highcap Securities Limited, suggested that the decline in Q1 2024 remittances could be attributed to factors such as the weakening of the local currency and the CBN’s policy directions. Despite this decline, he emphasized that there may be no cause for alarm at the moment.
The CBN had reported total direct remittances of $1.98 billion in 2023, a decrease of 8.2% from $2.16 billion in 2022. However, overseas remittances into the country surged to $1.3 billion in February 2024 compared to $300 million in the previous month.
These direct remittances, which come through International Money Transfer Operators and banks, play a crucial role in Nigeria’s economy. The decline in Q1 remittances underscores the need for continued efforts to attract foreign exchange into the country, particularly amid global economic uncertainties.
The CBN’s past initiatives, such as ‘The RT200 FX Programme,’ aimed to boost foreign supply through the non-oil sector, have shown positive results. However, challenges persist, and the outlook for remittance flows remains uncertain, as highlighted in a report released in the fourth quarter of 2022.
The report suggested that Nigeria’s remittance growth is likely to moderate in the coming years due to various factors, including declining real wages in host countries and economic challenges in recipient countries. Despite these challenges, efforts to enhance remittance inflows remain crucial for sustaining economic stability and growth in Nigeria.
