The Central Bank of Nigeria (CBN) latest External Sector Development Report (ESDR), has revealed that external financial flows to Nigeria has continued to grow with the current transfers amounting to $21.9 billion (N4.38 trillion) in 2014.
Remittances are the second largest source of foreign exchange inflows into Nigeria recorded in the balance of payments.
The CBN data showed that workers’ remittances accounted for more than 90 per cent of current transfers.
The balance consisted of general government transactions such as the local expenses of embassies and international organisations.
Analysts believe the $21.9 billion current transfers is a huge success when compared with $80.0 billion for oil and gas exports, $5.3 billion for foreign portfolio investment, $4.7 billion for foreign direct investment and $3.9 billion for non-oil exports.
“The figures for transfers and investment are unadjusted for outflows, which are modest in the case of transfers but sizeable for portfolio transactions. Current transfers could, to give just three destination points, finance housing construction, seasonal celebrations and/or import demand. For a number of reasons, we cannot be more precise, said analysts at FBN Capital.
While decrying the challenge of tracing remittances, the analysts noted that remittance may be received by the beneficiary through a bank, at a bureau de change, at the local office of the money transfer corporation or through independent channels such as a mobile telephone.
They added: “Some informed estimates place the share received through the banks as low as 25 per cent of the total. We do not envy the statistical authorities responsible. The data do not show a marked fall-off in transfers in 2008 and 2009 when the global credit event shook at least two of the countries where the Nigerian diaspora is well represented (the US and the UK.)
“Hargeisa, the capital of unrecognized Somaliland, has been rebuilt in the past 25 years with remittances. Their impact is everywhere visible, In Nigeria, however, the transfers represented 3.7 per cent of 2014 gross domestic products (GDP) and merely add to the grey areas in household consumption, imports and small-scale production.”
The analysts stressed that until bank accounts become more widespread and the tax net is extended, “We will have to live with these frustrations.”
Meanwhile, experts at African Economic Outlook, warned that Global economic turbulence still poses significant risks to the outlook for external finance of all kinds stressing that uncertainty about the recovery, particularly in the Euro area, may have a negative impact on trade and investment.