REMITTANCES from Nigerian diasporans fell to $3.3bn during the second quarter of this year representing their lowest level since 2008 as the Covid-19 pandemic affected the income of many Nigerians living abroad.
Historically, Nigeria has always been one of the top six nations when it comes to global remittances alongside the likes of India, China, Mexico, the Philippines and Egypt. However, the World Bank fears that global remittances will fall by as much as $100bn this year due to the effects of the coronavirus pandemic.
Nigerians generally remit an average of about $25bn back home annually but with this pandemic, there are fears that the figure could fall to as low as $14bn in 2020. Data from the second quarter shows that the 2020 remittances dropped by $2.5bn from the $5.8m sent last year to $3.3bn.
This development is reportedly down to the fact that many diasporans have either lost their jobs or seen their earnings tumble due to the global lockdown. Nigeria also relies on dollar inflows from remittances to improve on its balance of payment position, a critical economic indicator used in determining a country’s foreign exchange position.
Poor countries like Nigeria rely heavily on these inflows to soften the low income paid to citizens while also funding millions of families, paying for services including education and healthcare. Remittances only came second to oil as Nigeria’s top export earner, adding to much more than foreign portfolio and direct investments into the country.
Third-quarter figures are likely to improve as the unemployment rate drops, particularly in the US. For example, the US unemployment rate was as high as 14.7% in April at the height of the lockdown but has since dropped to 7.9% in September 2020.
However, some countries, particularly in Europe are going through the second phase of lockdown meaning more jobs could be lost as we approach winter. Nigerians generally look forward to the ember months for remittances as in the fourth quarter of 2019 and 2018, diasporans remitted $5.9bn and $6.24bn back home respectively.