Currencies
World Bank list problems that could reduce remittance inflow to Nigeria, others in 2024
The World Bank has highlighted factors that could lead to a decline in remittance inflow to Nigeria and other countries in the Sub-Saharan Africa region (SSA).
The bank stated this in its report on migration and development mainly in Lower- and Middle-Income Countries (LIMC) in 2024.
According to the bank, remittance inflow into the SSA region declined by 0.3% in 2023 but is projected to reverse the trend to grow by 1.5% this year.
Furthermore, the bank noted that risks to remittance inflow into the SSA in 2024 include; lower growth in developed economies- the source of remittances, escalation in conflict between Isreal and Hamas, security risks in the Sahel (Chad, Mozambique, and Mali) down to Nigeria and climate problem mainly drought in Southern Africa.
It stated, “Growth of remittances to Sub-Saharan Africa is projected to recover slightly from negative growth of -0.3 percent in 2023 to +1.5 percent in 2024. Risks to the outlook include lower-than-expected growth in developed countries that will lead to a decline in remittances sent by the African diaspora; an escalation of the conflict in Israel-Gaza that could disrupt the supply chain; security risks in Burkina Faso, Chad, the Democratic Republic of Congo, Mali, Mozambique, and Nigeria; and climate risks including a pronounced drought in southern Africa.”
Cost of sending remittances
Furthermore, the bank highlighted the continued elevated cost of sending remittances across Africa as a whole with the average cost of sending $200 increasing from 7.4% in 2022 to 7.9% in 2023. Also, it expressed concern with the ever-increasing cost of sending money among African countries with some intra-Africa remittances as high as 33% for $200.
The report shows that Nigeria received about $19.5 billion in remittances last year, the highest in the region, making up around 35% of the total inflow into Sub-Saharan Africa. Ghana and Kenya also received significant amounts, with $4.6 billion and $4.2 billion, respectively.
At the lower end of the top ten are Sudan and South Africa, each with $1 billion in remittances. Additionally, the report highlights that remittances make up one-fifth of the GDP in countries like Gambia, Lesotho, Comoros, Liberia, and Cabo Verde, which rely heavily on these funds for economic growth.
What you should know
The risks highlighted by the global lender are realistic and already at play so far in the year. The Isreal-Hamas conflict has lingered into the second half of the year while Houthi rebels in the Red Sea are disrupting supply chains and increasing freight time.
However, the bright spot, the Eurozone economy beat expectations in the first quarter of 2024 growing by 0.3% by quarter and 0.5% year-on-year – the strongest performance since the energy crisis began in 2022.
