Wednesday, July 22, 2020 / 09:52
AM / by FBNQuest Research / Header Image Credit: FBNQuest
From
the CBN's latest Quarterly Statistical Bulletin we see that net current
transfers in the balance of payments (BoP) declined by 19.5% y/y to US$6.2bn in
Q1 2020, and by 12.0% q/q. For net workers' remittances, the falls were 5.5%
y/y and 5.1% q/q. They account for over 85% of net transfers and peak in the
fourth quarter to coincide with the Christmas season, an exception being Q1
2019 due to a inflow of US$1.7bn from a development agency. At the outset of
the pandemic, the World Bank estimated a 20% fall in remittances for low and
middle-income countries.
The jury is still out in the case of Nigeria although there have been
some encouraging signs from other jurisdictions. In Kenya remittances fell off
in February and March but returned in May to January's healthy level.
Both Bangladesh and Pakistan reported record remittances in June, with a
49% y/y rise in the latter case. One common thread, which offers some read-across
for Nigeria, is that the cancellation by Saudi of the principal Hajj freed up
additional funds for remitting.
Nigeria is the sixth largest recipient of remittances globally and the
second in Africa (after Egypt). The five countries that are the largest sources
of remittances to Nigeria (US, UK, Germany, Italy and Canada) are all forecast
to contract by at least -7% this year according to the IMF's update last month
to its World Economic Outlook.
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Current transfers and portfolio
investment (net; US$ bn)
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Sources:
CBN; FBNQuest Capital Research |
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