April 29, 2013

Foreign remittances to Nigeria hit $21bn

Foreign remittances to Nigeria hit $21bn

Finance Minister, Mrs. Ngozi Okonjo-Iweala

By Omoh Gabriel, just back from Washington

Nigeria and five other countries have been named by the World Bank as top recipients of global remittances in 2012. A report released by the bank said; ”The top recipients of officially recorded remittances for 2012 are India $69 billion, China $60 billion, The Philippines $24 billion, Mexico $23 billion, Nigeria and Egypt $21 billion each.

Other large recipients include Pakistan, Bangladesh, Vietnam and Lebanon. Remittance flows to developing countries have more than quadrupled since 2000. Global remittances, including those to high-income countries, are estimated to have reached $514 billion in 2012, compared to $132 billion in 2000.

Remittance flows to Sub-Saharan Africa have been recovering from the contraction associated with the global financial crisis, but growth has been modest.

In 2012, the region is estimated to have received about $31 billion in remittances, only about one per cent increase over 2011. Nigeria is by far the largest recipient of remittances in the region, accounting for about 67 per cent of the inflows to the region in 2012, followed by Senegal and Kenya.

Zero growth in flows to Nigeria in 2012 is partly attributable to the feeble labour market recovery of its major remittance source countries in Europe, the UK in particular. Remittance flows to Nigeria and the rest of the region are expected to grow significantly in the coming years to reach about $39 billion in 2015.

2013 Budget: From left, Accountant General of the Federation , Mr. Jonah Otunla, Minister of Finance, Dr. Ngozi Okonjo Iweala  and Director General , Budget Office of the Federation, Dr. Bright Okogu at a Press briefing on the 2013 Federal Budget in Abuja. Photo by Gbemiga Olamikan.

File Photo: From left, Accountant General of the Federation , Mr. Jonah Otunla, Minister of Finance, Dr. Ngozi Okonjo Iweala and Director General , Budget Office of the Federation, Dr. Bright Okogu at a Press briefing on the 2013 Federal Budget in Abuja. Photo: Gbemiga Olamikan.

The report further said; “As a percentage of GDP, the top recipients of remittances in 2011 were Tajikistan, 47 per cent, Liberia, 31 per cent, Kyrgyz Republic, 29 per cent,  Lesotho, 27 per cent, Moldova, 23 per cent, Nepal 22 per cent and Samoa 21 percent.”

According to the latest edition of the World Bank’s Migration and Development Brief, “officially recorded remittance flows to developing countries grew by 5.3 per cent to reach an estimated $401 billion in 2012.

Remittances to developing countries are expected to grow by an annual average of 8.8 per cent for the next three years and are forecast to reach $515 billion in 2015.” Given that many migrants send money and goods through people or informal channels, the true size of remittances are much larger than these official figures.

The East Asia and Pacific region received an estimated $109 billion in remittances in 2012, about $5 billion lower than the estimate we made at the end of 2012, due mainly to a downward revision of inflows to China by the same amount.

The first half of 2012 saw a substantial decline in remittances to China, which may be a reflection of fewer funds being channeled through officially recorded remittances into investments such as property, as the government seeks to dampen the overheated real estate market. Nevertheless, remittance inflows to the region were an increase of 2.5 per cent over the 2011 value of $106 billion.

Remittances to Eastern Europe and Central Asia are estimated to have declined by 3.9 per cent to about $40 billion in 2012, partly due to the depreciation of the euro against the US dollar (lowering remittances in dollar terms). Continued strong growth in oil-exporting Russia underpinned buoyant remittances to Tajikistan and Ukraine, while weak conditions in the Euro Area depressed remittances to Romania, Russia and Serbia.

With officially recorded remittance inflows of about $6.5 billion in 2012, the Ukraine is the largest recipient in the region, followed by Russia ($5.7 billion), and Tajikistan ($3.7 billion). As economic conditions improve in Europe, and growth in Russia remains robust, officially recorded remittances to the region are expected to rebound in 2013-2015, exceeding the pre-crisis peak in 2014 and reaching US$52 billion in 2015.

The Latin America and Caribbean region saw a slight increase in remittances in 2012 to $62 billion, still more than $2.5 billion below the peak reached in 2008.

Mexico, which received $23 billion in 2012, accounts for 56 per cent of total remittances to the region, followed by Brazil ($4.9 billion). The US is the largest source of remittances to the region, accounting for 73 per cent of the total inflows in 2012. Although the potential impact of immigration reform currently being considered in the US remains unclear, improvements in the US housing market and faster job creation this year are projected to underpin strong growth in officially recorded remittances to Latin America in 2013-2015, rising to over US$81 billion in 2015.

With remittance inflows of an estimated $49 billion in 2012 (an upward revision of about US$2 billion from previous estimates), the Middle East and North Africa (MENA) region experienced the fastest expansion of remittances in 2012, growing by 14.3 per cent over 2011. Egypt, which accounted for over 40 per cent of total remittance inflows to the region, has seen a six-fold increase in remittances over the last eight years, making it the largest recipient in the region, ahead of Lebanon, Morocco, Jordan and Tunisia.

Although Egypt has a large stock of highly skilled expatriates in the US, the UK and Europe, about two-thirds of its migrants are working in oil-rich countries within the MENA region. Remittance flows to the MENA region are expected to grow by 5-6 percent, rising to $58 billion in 2015.

Officially recorded remittance flows to South Asia are estimated to have increased sharply by 12.8 per cent to $109 billion in 2012. This follows growth averaging 13.8 per cent in each of the previous two years. India remains the largest recipient country in the world, receiving $69 billion in 2012.

In addition to large numbers of unskilled migrants working mainly in the oil-rich Gulf Cooperation Council (GCC) countries, India also has a large skilled diaspora in the US and other high-income countries. Flows to Bangladesh, Pakistan and Nepal have also been robust, helped by strong economic growth in the GCC and India. Remittances to the region are projected to remain buoyant in the coming years, reaching $140 billion in 2015.

“The role of remittances in helping lift people out of poverty has always been known, but there is also abundant evidence that migration and remittances are helping countries achieve progress towards other Millennium Development Goals (MDGs), such as access to education, safe water, sanitation and healthcare,” said Hans Timmer, Director of the Bank’s Development Prospects Group.

The report said that the high cost of sending money through official channels is an obstacle to the utilisation of remittances for development purposes, as people seek out informal channels as their preferred means for sending money home.

The global average cost for sending remittances was 9 per cent in the first quarter of 2013, broadly unchanged from 2012. The World Bank also said it has set up Global Knowledge Partnership on Migration and Development (KNOMAD), envisioned to become a global hub of knowledge and policy expertise on migration issues.

KNOMAD was initiated in response to the rapid growth in migration and remittances over the last decade. Nearly one billion people – that is, one out of every seven persons on the planet – have migrated internally and across international borders in search of better opportunities and living conditions, with profound implications for development.