The World Bank has urged Nigeria and other countries with significant remittance from the diaspora to leverage it to fight poverty and finance other needs in the country.

This was disclosed by the international lender in its latest Migration and Development Brief, which indicated that the diaspora inflow to Nigeria stood at $19.5bn, lower than the projected N20bn.

However, it was the highest in the sub-Saharan African region at 35 per cent.

The report noted that the decline in remittances was felt in other regions as well.

However, despite the slowdown, remittances still outpaced Foreign Direct Investment and Official Development Assistant, a trend that the bank would widen in coming years due to migration pressures driven by demographic trends, income gaps, and climate change.

“This is not to suggest that remittances could substitute for FDI or ODA. Developing countries need FDI, especially in critical infrastructure and green investments. They also need ODA to address public financing needs and externalities such as fragility and climate change. Instead, countries need to take note of the size and resilience of remittances and find ways to leverage these flows for poverty reduction, financing health and education, financial inclusion of households, and improving access to capital markets for state and non-state enterprises,” the report said.

In terms of cost, Sub-Saharan Africa has the highest remittance cost with an average of 7.9 per cent compared to other regions.

According to the World Bank, these remittance costs include payments, such as bank charges, money transfer operator’s percentage as well as stamp duties, among others.

The report added that the fees charged to senders (and sometimes recipients) were often masked by nontransparent foreign exchange markups.

“In many countries with multiple exchange rates, remittances tend to flow through unregulated channels. In such cases, the foreign currency may not even flow across borders, thus, depriving the recipient country access to foreign exchange,” the report said.

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, earlier this year during a panel discussion at the 2024 Economic Outlook and Budget Analysis organised by the Lagos Chamber of Commerce and Industry, noted that while the World Bank estimated that a total of $20bn was brought to Nigeria in 2023, most of the funds did not come in.

“The World Bank said for 2023 our diaspora remittances was about $20bn. We estimate that more than 90 per cent of that did not get to Nigeria. They were being externalised.

“We have spoken to loads of Nigerians almost everywhere and they told us how they send money now. They use digital apps. We have the list of those apps. They use parallel market rates. So, they credit naira here in Nigeria without bringing the dollars,” he said.

Meanwhile, the Central Bank of Nigeria has approved in principle 14 International Money Transfer Operators in a bid to strengthen remittance into the country via formal channels.