TheNewsGuru

Tag: Diaspora Remittances

  • INTERVIEW: 75% of diaspora remittances are to cover food, medical, education costs – Migration Expert

    INTERVIEW: 75% of diaspora remittances are to cover food, medical, education costs – Migration Expert

    The patterns of migration in Nigeria are diverse and multifaceted. From rural-rural migrations driven by communal conflicts and environmental challenges to rural-urban migrations spurred by the quest for better living conditions, urban-urban and inter-state migrations for better employment opportunities, we learn that the motivations driving migration are as varied as the destinations.

    Understanding these patterns and the diverse factors that shape individuals’ decisions to relocate within and outside the country is crucial to shaping informed policies and strategies that address the root causes and effectively help to manage migration.

    This exclusive interview with Solomon Obanla, a migration expert with over 15 years of experience in the field, shares insight into the patterns and evolving trends of migration within Nigeria.

    What are the key patterns and trends in migration within Nigeria, and how have they evolved over the past decade?

    Migration in Nigeria manifests through diverse patterns. These patterns include rural-rural migration, characterized by the movement between villages either temporarily or permanently; rural-urban migration involving movement from rural areas to towns or cities; urban-urban migration which is relocation within towns or cities, and inter-state migration, involving movement across Nigerian states. Each migration pattern is influenced by a myriad of factors such as communal conflicts rooted in cultural, ethnic or religious differences.  In the case of rural-urban migrations, inadequate infrastructure and the absence of fundamental amenities like water, education, healthcare, and proper roads compel individuals to seek better conditions in urban centers. The allure of employment prospects and an improved quality of life often propel urban-urban migration, alongside motivations tied to marriage or securing a more favourable job location. Inter-state migrations, on the other hand, are influenced by a complex interplay of factors such as security concerns, educational pursuits, employment opportunities, economic considerations, and the impacts of climate change.

    Are there specific sectors in Nigeria where migration has had a more pronounced impact, either positive or negative, and what strategies can be employed to maximize the benefits of migration in these sectors?

    Generally, internal Migration in Nigeria impacts positively on human development. We have seen an increase in the number of enrollments in the educational sector from primary to higher institutions both in rural and urban settlements. There is also measurable improvement in the standard of living of people who move from rural to urban settlements, and people who move from rural to rural settlements are assumed to have a better life expectancy. I can say that internal migration in Nigeria has had a positive impact on the educational sector. According to the National Universities Commission, Nigeria now has 270 universities across the country, as well as several Polytechnics and mono-technics. These higher institutions are owned by federal and state governments as well as private individuals and corporations. Some of these institutions are located in some rural areas in Nigeria thereby improving the standard of living of people in the locations and creating jobs and business opportunities. Also, most of the students in these institutions came from different States across Nigeria, and their migration for study purposes promotes cultural, religious, and ethnic integration and marriages in their destination settlements.

    In some settlements in Nigeria, migration has had a negative impact on the agricultural sector. Land disputes, communal conflict; poor infrastructural developments, lack of basic amenities, and environmental degradation have made many rural settlers migrate to urban areas and this has greatly reduced food production and supply in Nigeria. To maximize the benefits of migration in these sectors, both government and private institutions need to work together in making good economic policies and providing basic amenities and security.

    In your view, how does internal migration impact urbanization and economic development in major Nigerian cities?

     Internal migration (rural-to-urban) impacts both positively and negatively on urbanization and economic development in the major cities of Nigeria. Take Lagos for instance, migration into Lagos has promoted trade flow and employment possibilities for its youthful migrants, thereby, positioning the city of Lagos as the economic, financial, and commercial nerve center of Nigeria. It is said that Lagos’s urbanization started in the 1970s until the 1990s during the oil boom and industrialization. For those decades, even until now, thousands of people continue to migrate to Lagos from rural areas across the country to seek employment and business opportunities. This migration pattern has also led to inadequate physical and social infrastructure, proliferation of informal settlements, overcrowding, increase in crime, and so on.

    What is the nexus between forced migration, conflict, and development within Nigeria and its neighboring regions?

    Armed conflict in Nigeria is the push factor of forced migration. This has forced millions of people to flee from their settlements. Many of them are now internally displaced while others have sought refuge in neighbouring countries. Over the years, Nigeria has been devastated by violent conflicts, mainly from the Boko Haram insurgency in the north-east, banditry and kidnapping in the north-west, and farmer- herder conflict in the north-central parts of the country. Attacks and insecurity, particularly in the north-east, have displaced millions of people, devastated agricultural production and other livelihoods, cut off essential services, and resulted in food insecurity and the outbreak of diseases such as cholera. The International Organization for Migration (IOM) Global Crisis Response Platform Nigeria reported that non-state armed groups in the north-east have perpetrated violence, causing a major humanitarian crisis, heightened insecurity, and waves of forced displacement and human rights violations. According to United Nations Office for the Coordination of Humanitarian Affairs (OCHA), 8.4 million people in the north-east were in need of humanitarian services in 2022, of whom 2.2 million were Internally Displaced Persons (IDPs); 1.5 million returnees who lack access to likelihood and essential services; and 3.9 million members of communities affected by the hosting of IDPs, including an estimated one million people who were inaccessible to humanitarian workers.

    The perceived inability of the leadership to solve important issues impacting the nation, such as employment creation, resource allocation, and infrastructure development, exacerbates insecurity in Nigeria. Religion has also played a pivotal role in escalating conflicts in Nigeria and Mali, as evident in the operations of The Islamic State’s West Africa Province (ISWAP), Boko Haram and other religiously affiliated armed groups in Nigeria and the Jama’at Nusrat al-Islam wal Muslimin, the Islamic State in the Greater Sahara in Mali. It is therefore important that the government of Nigeria should guarantee the safety of forced migrants who are willing to return to their ancestral homes. Also, the authorities in Nigeria and Mali should ensure that the rights of refugees and asylum seekers are protected especially by granting nationality/citizenship to refugees who may be unable to return to their places of origin, to avoid a situation of statelessness in reference to the 2017 Banjul Plan of Action on the Eradication of Statelessness.

    How do remittances from the Nigerian diaspora contribute to the country’s economic development and social well-being?

    Remittances from the Nigerian diaspora contribute to Nigeria’s economic development and social well-being many ways. About five million of Nigerians depend on remittances. Every year, about ten million of Nigerians in diaspora send money home to their families either for projects or well-being, and millions of Nigerians benefit from them. Nigerian diaspora make an invaluable contribution to the Sustainable Development Goals (SDGs) through remittances and investments. In particular, they contribute to ending poverty and hunger; promoting good health, quality education, clean water and sanitation, decent work and economic growth; and reducing inequalities.

    Nigerian diaspora send on average US $200 to US $300 home every one to two months. This represents only 15 per cent of what they earn. The rest stays in their host countries. But what they do send can make up as much as 60 per cent of a household’s total income, representing a lifeline for millions of families. Remittances can be costly to send, and technical innovations like blockchain and mobile money might be the solution to keeping costs down. Right now, currency conversions and fees take up about 6 per cent of the total amount sent. That’s double the 3 per cent target set by SDG. In this regard, there’s enormous potential for innovative digital financial services.

    Also, about 75 per cent of remittances are used to put food on the table and cover medical expenses, school fees or housing expenses. In times of crisis, Nigerian diaspora are likely to send more money home to cover family emergencies. The remaining 25 per cent of remittances, representing over US$150 billion per year, can either be saved or invested in asset-building or activities that generate income and jobs.

    What are the key challenges and opportunities associated with international migration for skilled professionals leaving Nigeria?

    Most Nigeria skilled professionals who seek international migration are pushed by circumstances such as toxic work environment, poor remuneration, poor infrastructure, unemployment, layoff, etc. Over the last few decades many African countries have failed to create jobs, despite pursuing structural adjustment policies recommended by the World Bank and International Monetary Fund. Instead, in many countries including Nigeria, there has been a decline in job opportunities and real incomes. Between 1994 and 2004, the number of workers living on less than a dollar a day increased by 28 million in sub-Saharan Africa. International migration definitely has many complex challenges including brain drain, revenue loss and reduction in the supply and quality of essential services.

    Conversely, opportunities associated with international migration for skilled professionals leaving Nigeria include job vacancies, increase in economic growth, additional sources of tax for host country and remittances for countries of origin, reduction of unemployment new innovations and ideas, favourable economic and cultural impact, improved lifestyle, etc.

    Considering the brain drain phenomenon, how can Nigeria effectively harness its diaspora’s intellectual and financial resources for development?

    International migrants (skilled professionals) from developing countries like Nigeria are generally more likely to stay in their host country than migrants from advanced countries. Some may never return back to their country of origin. The countries of origin of these skilled professionals will have to attract back these emigrants in order to ensure that their fragile economies will be able to maintain enough highly skilled professionals for development. Regaining them can also bring valuable management experience, entrepreneurial skills, and access to global networks. However, experience shows that such efforts have, for most of the time, been fruitless. One way the Nigerian government can alleviate the negative impact of the brain drain is to facilitate the return of its skilled professionals and their reintegration into their home communities and to devise ways of using their skills. The receiving countries can also play an important role in this respect. Use of short-term and project-related migration, as a means of improving the skills of nationals of sending countries can be a very helpful instrument. Bilateral or multilateral agreements can be signed and implemented for this purpose.

    How can Nigeria’s policy framework be strengthened to support sustainable reintegration and development for returnee migrants?

    I think there are no return migration legal frameworks and there is no specific stand-alone policy on return migration. Other migration policies refer to it and there is a Standard Operating Procedure (SOP) on return and reintegration (an operational document). The 2014 National Policy on Labour Migration (NPLM) has a section dedicated to return migration (FGN, 2015a). The aim of the policy is to facilitate the voluntary return and reintegration of Nigerian migrant workers. The policy condemns forced returns and describes four areas for government action to achieve its objectives on return migration – collaboration between Nigeria and host countries on return and reintegration programmes, ensuring returnees can apply their skills and expertise to the development of Nigeria through reintegration programmes, reducing bottlenecks associated with the registration of companies to incentivize returnees to invest in Nigeria, and more generally creating an environment conducive to attracting the return of Nigerian talents.

    The remit for return policy issues sits with the National Commission for Refugees, Migrants, and Internally Displaced Persons (NCFRMI), formerly known as the National Commission for Refugees, which coordinates return, readmission and reintegration (RRR) initiatives across the other ministries and agencies involved. It is important that government agencies and ministries dealing with the issues of return migrants, and civil society organizations should work in collaboration towards sustainable reintegration and development for returned migrants.

    What role do governmental and non-governmental organizations play in fostering a conducive environment for migration that aligns with sustainable development goals in Nigeria?

    The SDGs’ central reference to migration is made in Target 10.7, which is, to facilitate orderly, safe, regular, and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies, which is in Goal 10 to reduce inequality within and among countries. Some other targets also make direct connections to migration topics, including labour migration (8.7 and 8.8), international student mobility (4.b), human trafficking (5.2, 8.7 and 16.2), remittances (10.c), migration data (17.18) and more. To foster a conducive environment for migration that aligns with sustainable development goals in Nigeria, the government has a pivotal role to play in creating an environment that encourages citizens to thrive and fulfill their aspirations, thereby reducing the urge to emigrate. The government needs to partner with non-governmental organizations, and private institutions to create more jobs for its youthful population who are potential migrants, support small and medium-sized enterprises (SMEs), and digital transformation. It is just very essential to create opportunities for the younger population. These efforts are vital in providing the youth with alternatives and reducing the desire to migrate. While there is nothing inherently wrong with migration, individuals also should have a clear purpose and goal when moving to another country.

    From your perspective, what policy recommendations would you propose to ensure migration is a catalyst for sustainable development within Nigeria?

    I would like the government to pay close attention to the issue of irregular migration, human trafficking, and organ harvesting. We cannot also over-emphasize the need for the government to partner with private institutions towards the creation of more job opportunities and support small and medium-sized enterprises (SMEs).

     

  • Diaspora cash remittances as a metaphor for Nigeria’s economic malaise – Dele Sobowale

    Diaspora cash remittances as a metaphor for Nigeria’s economic malaise – Dele Sobowale

    By Dele Sobowale

    “Diaspora cash remittances drop by 27% to $17.2bn in 2020.”

    Diaspora cash flows in 2020 were bound to be lower than those of 2019. COVID-19 made it impossible for Nigerians worldwide to work; earn income and send money home. Most were living on food donations by charities or Local Governments. It is also not surprising that the fourth quarter, Q4, remittances were higher than the second quarter, Q2, and third quarter,Q3.

    Many countries had relaxed restrictions and people were returning to work again. Besides, Christmas will always induce spending; and sending money home is one aspect of it. Furthermore, many Nigerians, who annually returned home for Christmas, stayed away in 2020. COVID-19 protocols in Nigeria and other countries, as well as requirements by airlines made travelling out of home base a risky proposition.

    So, they sent money instead. But, it will amount to self-deception of the worst kind to assume that diaspora cash remittances will continue to climb to 2019 levels in 2021. Several reasons account for this. But, three will be touched upon.

    Finally, the question can be asked: whose money is involved in the diaspora cash remittances? That is easy to answer. Southerners account for close to 80 per cent of the cash flows. Northerners bring in very little. But, the parallel market, which governments since the second military coup had nurtured, is dominated by Malas.

    Central Bank of Nigeria’s, CBN, policy inconsistencies in the last year are giving people concerns. Diaspora remittances, especially those meant for investments in Nigeria require a minimum degree of predictability for them to be sustained. Without that, there will be reluctance to continue. One important aspect of policy consistency is the maintenance of CBN’s independence from political influence by the Federal Government. Every administration, if allowed, would want to use the CBN to fight its political battles. It is up to CBN, like the Bank of England or the US Federal Reserve Bank, to resist the political pressures. A central bank perceived to be too subservient to government endangers the country’s economic well-being.

    It needs to be repeated that the CBN’s “post no debit” instruction to banks with respect to #ENDSARS# protesters accounts will continue to negatively affect diaspora cash remittances. I happen to know that the blunder committed by CBN had driven more young people to patronise crypto-currency. They will not return to the banking system soon. Here is an example.

    INTERNET FRAUDSTERS HAVE ALSO DECAMPED TO CRYPTO

    “Nigerian who defrauded US state of $8000 jailed two years, forfeits property.”

    News Report, March 23, 2021.

    Ordinarily, internet fraud involving Nigerians are no longer astonishing – even if a state government is the victim. What made this particular story interesting was the report which said “The convict redeemed the $8000 benefit through the Bitcoin wallet addresses he got from various crypto currency traders.”

    The report tallies with reports I am receiving from my assistants at Ibadan – where the Economic and Financial Crimes Commission, EFCC, had done a great job decimating the Yahoo Boys. Despite EFCC’s successes, it would appear that the internet fraudsters are two steps ahead of security forces. CBN inadvertently played a role in the switch from remittance accounts to crypto. The closure of accounts on the orders of the Central Bank was a wake up call for the fraudsters. Thereafter, they had resolved to transfer their dollar loot to Bitcoin as soon as possible – making it more difficult for the Nigerian authorities to track them. That shift alone will reduce dollar in-flow into the remittances accounts. The CBN acted too previously by also asking commercial banks to close crypto accounts – before patiently monitoring and identifying the owners of the funds; as well as their sources. Now, nobody trading in crypto currencies will have anything to do with banks. Billions of dollars will henceforth be converted to Bitcoin without passing through the banks. That is our loss.

    FORGET FDI WHEN GOVT IS WASTEFUL AND FRAUDULENT

    “FG refineries earn N21bn, lose N778bn in five years.” News Report.

    Imagine, if you can, a private company in which every Nigerian adult is a shareholder; and each of us paid for our shares with our own money. Imagine further, that the Chairman and Directors of this jointly owned enterprise has earned a mere N21bn in five years and lost N778bn. The first question is: how many of us will want to continue with the business? The second question is: how many of us will want the Chairman and the Directors of the company to continue to run the affairs of the company? The third question is: given that N778bn is nearly four times the amount needed to stop ASUU and the Non-Academic Staff of Universities from going on incessant strike, ordinary common sense, which apparently is not common in Abuja, would have suggested that a government which cannot adequately fund the nation’s economy has no money to spare on major losers like so-called refineries.

    We might also ask a relevant question. “Who in his right mind will want to send funds to an economy whose government is so wasteful and destructive of wealth? We must assume that our people in the diaspora who work very hard for their money will continue to support a nation whose economy is managed by the worst set of destructive managers imaginable.

    However, a closer look at the scam, which the expenditure on refineries have become, will reveal the underlying secret. When one asks: who benefits from this deliberate and colossal waste? The answer tells the real story — Northerners. The Buhari administration is hiding behind the refineries to transfer wealth to Northerners well-connected to the government. Buhari is not a fool. He is wilfully robbing the South to pay his fellow Northerners. He knows the refineries will never work and be profitable. But, he doesn’t care; as long as his Hidden Agenda succeeds.

    Unfortunately for the South, we have the worst set of traitors in the National Assembly at the moment. They know the truth; they are too comfortable or too timid to speak out against what is essentially a rape of the South – who are paying the bills for this criminal waste of funds. The only consolation lies in the fact that irrespective of what Buhari does, the North can never catch up to the South.

    WHOSE MONEY?

    Finally, the question can be asked: whose money is involved in the diaspora cash remittances? That is easy to answer. Southerners account for close to 80 per cent of the cash flows. Northerners bring in very little. But, the parallel market, which governments since the second military coup had nurtured, is dominated by Malas. It has been another case of Southern monkeys working for dollars and Northern baboons “chopping” the better part. Perhaps, after sorting out the issue of herdsmen in the South, we need to regain control of Broad Street, Lagos and the Murtala Mohammed International Airport; as well as other places we take our dollars for exchange in the South. For too long, Southerners have left a lucrative trade in the hands of Northerners. We should go and get our share of the market and keep it.

  • New policy to improve diaspora remittances starts Dec. 4 – Emefiele

    New policy to improve diaspora remittances starts Dec. 4 – Emefiele

    The Central Bank of Nigeria (CBN), Mr Godwin Emefiele has announced that the new CBN policy to improve the Diaspora remittances into the country takes effect on Dec. 4.

    Emefiele made this in his remarks on “Improving remittance Inflows into Nigeria ” obtained from the apex bank’s official website.

    He said that policy measures were designed to boost and facilitate an efficient flow of remittances sent home by Nigerians in the Diaspora.

    “In an effort to liberalise, simplify and improve the receipt and administration of the Diaspora remittances into Nigeria, CBN wishes to announce as
    follows:

    “Beneficiaries of Diaspora Remittances through International Money Transfer Operators (IMTOs) shall henceforth receive such inflows in foreign currency (U.S. dollars) through the designated bank of their choice.

    “Such recipients of remittances may have the option of receiving these funds in foreign currency cash (U.S. dollars) or into their ordinary domiciliary accounts.

    “These changes are necessary to deepen the foreign exchange market, provide more liquidity and create more transparency in the administration of Diaspora Remittances into Nigeria,” he said.

    Emefiele said that the changes would help finance a future stream of investment opportunities for Nigerians in the Diaspora, while also guaranteeing that recipients of remittances would receive a market-reflective exchange rate for their inflows.

    “All Authorised Dealers and the general public should note that beneficiaries shall have unfettered access and utilisation to such foreign currency proceeds either in FX cash and/or in their Domiciliary Accounts,” he said.

    He however said that some of the stakeholders had tried to frustrate the new policy measures, adding that the apex bank would resort to stiffer measures to ensure its implementation.

    “In the course of following up on the implementation of the aforementioned new policies, the CBN observed some pushback by some of the International Money
    Transfer Operators (IMTOs) who were bent on undermining the new policies.

    “This was the reason the CBN had to
    insist that all DMBs must close all Naira General Ledgers through which the Naira remittances were hitherto being carried out.

    “In an effort to enable smooth implementation of the policy, the CBN has engaged with the commercial banks and the IMTOs to ensure that recipients of remittance inflows are able to receive their funds
    in the designated foreign currency of their choice.

    “As a result of these engagements, which
    took place with major IMTOs and the Deposit Money Banks (DMBs), the stakeholders have committed that they would deploy all the necessary tools to ensure
    that these measures become effective from Friday, Dec. 4.

    “I therefore seize this opportunity to announce to Nigerians both at home and in the Diaspora that the policy of recipients receiving their monies from abroad kicks off on Friday,” he said.

    Emefiele said that the changes came as a result of the bank’s internal review of the operations of IMTOs and the potential impact improved flows could have on the economy.

    He said that the IT systems of the IMTOs (Western Union, Moneygram and Ria services) and the DMBs had been configured to begin such remittances.

    He said that the new policy measures would help in providing a more convenient channel for Nigerians in the Diaspora to remit funds back to Nigeria.

    “We will also ensure that these funds can contribute to the overall development of our economy,” he assured.

  • CBN Claims $2.6bn Not $26bn as Diaspora Remittances!, By Henry Boyo

    CBN Claims $2.6bn Not $26bn as Diaspora Remittances!, By Henry Boyo

    BY HENRY BOYO

    In the World Bank’s 2018 report, titled “Nigerians Living abroad sent $22bn home in 2017”, the Bank noted that, the top recipients of Diaspora remittances were India with $69bn, Chile ($64bn), Philippines $33bn, Mexico $31bn, Nigeria $22bn and Egypt $20bn. Notably, however, sub-Sahara Africa, attracts the most expensive average remittance cost at about 9.4 per cent, compared with the global average of 7.1 per cent. The cost of remittance for Nigerian beneficiaries, clearly, exceeds 19 per cent as N305=$1 instead of N360=$1, is ultimately paid to recipients locally.

    Furthermore, in another article titled “Diaspora Remittances 2015-2018: Positive indication on human capital development” by Inwalomhe Donald, in The Guardian Newspaper of 18th June 2019, the author noted that “data from CBN, with regard to Diaspora remittances, had outpaced oil revenue in 2015 as $21.2billion was officially sent home, by Nigerians abroad, compared with $19.6billion oil export proceeds. Similarly, Nigeria’s Diaspora remittances in 2016 and 2017 were $19.7billion and $22billion respectively, compared with oil export revenue of $10.4billion and $13.4billion. The Guardian report also noted that CBN’S ANNUAL ECONOMIC DATA, confirms that “the oil revenue was $18billion while Diaspora remittance was $25.1billion in 2018; this value confirms Nigeria as the number one African country and among the top five countries globally for such remittances!” which CBN indicated “were equal to 5.6% of Nigeria’s GDP in 2017!”

    PWC, an International Intervention Conglomerate, also reported that 2018 Diaspora remittances, was 14 per cent higher in 2017, and 7 times the total foreign aid of about $3.359bn to Nigeria; the PWC report also confirmed that the 2018 remittances of $25bn represented 6.1 per cent of Nigeria’s GDP, and 11 times the value of Foreign Direct Investment, but was equal to 84 per cent of 2018 budget. Consequently, PWC expressed concern that “one may never know or be privy to the fundamental reasons why Nigerian Governments have serially failed, to harness the significant human and material Capital of the Diaspora Communities, as catalysts for our developmental aspirations, as some other countries have successfully done”!

    Incidentally, on Saturday, 12th October 2018, Andrew Nevin, the PWC Chief Economist, expressed this same view on Channels TV, Sunrise programme, when he emphasized the need to create a Special Purpose Vehicle, to transform Nigeria’s economy and GDP with the significant annual harvest from the Diaspora.

    There is, clearly indisputable consensus, up to this point, between World Bank Reports, and CBN and PWC official estimates on the value of Diaspora remittances.

    Inexplicably, however, CBN’s record of the value of these remittances, seems to have changed radically, in the THISday Newspaper report, of Sunday 13/10/2019 titled “CBN Clarifies Diaspora Remittances; Says Official Inflows is $2.6bn, Not $26bn!!”

    The CBN’s unexpected pushback, was published, barely 7 days after Anthony Ani, who was Finance Minister 1993 to 1998, queried the present destination of Diaspora dollar remittances, in an article, titled, “$26bn Diaspora Remittances: Where are the Dollars?” In that article, Tony Ani alluded to the alleged abuses identified by a columnist, Henry Boyo, in the Punch edition of September 9, 2019.

    Curiously, the former Minister, believes that these Remittances are massively laundered by Nigeria’s banks, and therefore explained that, “When in 1995 we at the Ministry of Finance, reviewed the country’s sources of foreign revenues, we found out that nothing was coming in from Nigerians in the Diaspora, whereas India and Jamaica were living on foreign exchange from their citizens abroad.” “When I enquired why Western Union and MoneyGram could not receive money from Nigerians abroad, I was told that it was due to our tax laws.”

    This development according to Etubom Ani, necessitated the change in Nigeria’s tax laws to accommodate those in the Diaspora; expectedly, with the enactment of new tax laws in 1996, Diaspora remittances have increased, exponentially.

    However, the former Minister is categorical “that Diaspora remittances are not presently domiciled in Nigeria and therefore observed that there is collaboration between CBN, Nigerian banks and Western Union/MoneyGram to retain the dollars abroad”; consequently, Ani advised that government must investigate the infraction, punish money launderers, and recover all past Diaspora remittances retained abroad!”

    However, in an unexpected somersault on its earlier favourable reports on Diaspora Remittances, Mr. Isaac Okoroafor, Corporate Communications CBN’s Director, has surprisingly, queried the sources of data being referenced by critics; the details of Okoroafor’s chat, with James Emejo of THISday were published on Sunday 13th October, 2019, with the title “CBN Clarifies Diaspora Remittances, Says Official Inflows Is $2.6bn, Not $26bn.” According to Okoroafor, the 2018 data, purported to be from the World Bank, “had earlier, also, been queried by CBN’s Monetary Policy Committee (MPC)”, because they did not reflect the actual amount of inflows from abroad. Okoroafor therefore cynically reported that “we are looking for the so called $26 billion Diaspora cash, because such cash will impact positively on our reserves!” The CBN Director, according to the same report therefore chuckled at those bandying such figures and therefore advised that, an understanding of the methodology through which the data was sourced, could provide an insight into why critics’ Diaspora figures might be off the target! Okoroafor, also claimed that, instances of such inaccurate statistics, further lent credence to the recent call by President Muhammadu Buhari, that homegrown data should predicate the policy recommendations of its latest Economic Advisory Council!

    Indeed, President Buhari recently faulted the statistics on Nigeria produced by the IMF/World Bank, and described them as wild estimates, while Okoroafor, similarly, observed that “the IMF and the World Bank have also churned out data, suggesting structural weaknesses in Nigerian’s economy and, therefore, advised government to activate urgent reforms.

    Okoroafor also suggested that “the calculation of remittances by these foreign bodies, usually include data from inward official sources like Western Union, as well as money/cash being brought by Diaspora Nigerians, coming home for any social or family function; for example, he explained, that “my brother is in the USA, wants to send money home but has a friend in Lagos.” “That friend in Lagos wants a shoe from Harrodsburg. The friend in London uses his credit to buy the shoe in Harrods’, and (then) sends it to Lagos and tells the guy in Lagos to (then) give the naira equivalent to the Diaspora’s relative in Lagos.” The same (exchange) process is similarly adopted, according to Okoroafor for goods bought in Nigeria by Nigerians migrants in China.

    In such event, the CBN Director explained that, “now, when the World Bank sums up the dollar value of all these various activities, they say we receive Diaspora remittances of $26 billion. I’m disappointed that enlightened people could now say remittance is $26 billion; this gives the impression as if CBN has it in its pocket.” In practice, it is not unusual for the federal government and foreign bodies to differ on such data; for example, government and World Bank also differed recently, on the source and value of spending on Social safety nets, which the World Bank claims, is funded primarily from Development/Aid Partners.

    The Minister for Finance/Budget and National Planning, Mrs. Zainab Ahmed, also differed with the World Bank, on source for funding Nigeria’s social investment programmes; the Minister explained that “Nigeria’s intervention programmes, conversely, include pension, health and disability insurance programmes and several other programmes that other countries put together and highlight.”

    Ultimately, however, irrespective of the above differences, the CBN should defend its earlier celebrations of Nigeria’s premium rating in the value of Diaspora remittances to Africa and also explain why Nigerian beneficiaries of even its reported modest $2.6bn were not paid in dollars by respective banks!!!

    If the CBN is unable to respond, in plain language, to allegations of massive money laundering, by banks, with Nigeria’s Diaspora remittances, then, it would be inevitable to conclude that CBN is possibly also involved in a massive cover-up. What a shame this will be, if it is so?

  • Re:$26bn Diaspora Remittances: Where Are The Dollars?, By Henry Boyo

    Re:$26bn Diaspora Remittances: Where Are The Dollars?, By Henry Boyo

    (A REJOINDER BY ETUBOM ANTHONY A. ANI – FORMER MINISTER OF FINANCE – 1993-1998)

    “The above question was posed in an article in The Punch Newspaper edition of September 9, 2019, by Columnist, Henry Boyo. I have been a daily reader of Punch for the past 10 years and I have not yet, read any comments from anyone on this question. There is need to discuss this issue, as it appears that there is massive foreign exchange laundering, going on in our banks. As the architect of the Diaspora Remittances in 1996, I am naturally concerned at the abuses disclosed by Mr. Boyo.”

    “When in 1995, we at the Ministry of Finance, reviewed the country’s sources of foreign revenues, we found out that nothing was coming in from Nigerians in the Diaspora, whereas India and Jamaica were living on foreign exchange from its citizens abroad. When I enquired why Western Union and MoneyGram could not receive money from Nigerians abroad, I was told that it was due to our tax laws. As a Chartered Accountant Student in 1962, I studied Comparative Commonwealth Taxation-Nigeria, Jamaica and UK, and I found out that the tax laws of these Countries had the same wordings on imposition of tax (“tax is imposed on income accruing in, derived from or brought into”) the question then to me was why income “brought into” India was not taxed in India. On enquiry, I found that India had modified its tax laws to accommodate its citizens living abroad who wanted to send money in foreign exchange to India. In 1996, I had proposed (and it was accepted by the Federal Executive Council) in a new law, regarding Nigerians repatriating remuneration from abroad, Nigerians repatriating dividends, royalties, fees, commissions from foreign countries receipts by authors, sportsmen/women, musicians, play writers, artist, etc. Such income repatriated into Nigeria in foreign currency was 100 per cent exempted from tax, provided the foreign currency was repatriated through a domiciliary account with a Nigerian bank! With the promulgation of this law, First Bank Nigeria Ltd brought in Western Union in august 1996 while USA brought in MoneyGram a few weeks later.”

    “In 1996, Nigerians, abroad, repatriated about $4.5bn (about 50 per cent of our gross revenue from oil) and we ensured that these amounts were brought into Nigeria, intact, in foreign exchange. The receipts increased exponentially in 1997 and 1998 and we also made sure that they were received in Nigeria, in foreign currency. The receipts helped to stabilize our exchange rate mechanism at N82 to a dollar, throughout my tenure as Minister of Finance, to the extent that Naira was internally convertible currency.”

    “Some years ago, on my visit to London, I went to Western Union office, at Marble Arch, to test by remitting £500 to my son in Nigeria. I first had to convert the money to dollars and to my surprise; Western Union gave me a quote in Naira to be claimed by my son. I refused their Naira equivalent and insisted that my son must be paid in dollars. It was obvious to me, that there was an arrangement between our Nigeria Banks and Western Union/MoneyGram, whereby the former pays from their excess Naira liquidity while the later retains the dollars abroad. In other words, the dollar remittance is retained abroad and is laundered by the Nigerian Banks. This is definitely against the law which provides that all remittances must be brought into Nigeria in foreign currency via domiciliary account.”

    “If by chance, as in my case, the dollar is remitted into Nigeria, the Central Bank of Nigeria (CBN) on 14th August 2014 introduced the Outward Money Transfer Service and authorised the same MoneyGram and Western Union to re-export, in tranches of $5000 per transaction, to Nigerians abroad, on payment of the Naira equivalent at the CBN rate of exchange. Thus, Nigeria is the only country in the world re-exporting its remittances. It is relevant to note that the Naira is not a convertible currency but remittances which are meant to stabilize our exchange rates are re-exported! There is something wrong at our Central Bank. It could be that we have imported the mentality of commercial banking into CBN. We now need real Central Bankers to govern our Central Bank. We have Central Bankers amongst those in CBN, and we also have Central Bankers amongst the members of the Nigerian Economic Society (NES) or, alternatively, indeed, we can even go outside Nigeria to employ Central Bankers. The fact is that Diaspora remittances are not retained in Nigeria and there is a collaboration between CBN, Nigerian Banks and Western Union/MoneyGram; in such event, Government must investigate the infraction, punish the money launders, and recover all past Diaspora remittances retained abroad! The Outbound Money Transfer Services must be stopped and all our remittances retained for Naira stability and the Nation’s development.”

    COLUMNIST’S POSTSCRIPT OCTOBER 2019: Chief Anthony Ani, was, notably, former Chairman of KPMG (a renowned, International Intervention Accounting Firm), before he was made Finance Minister, between 1993-1998, in General Sani Abacha’s regime. Arguably, the duo of Tony Ani, a highly accomplished Accountant, and Professor Sam Aluko, a cerebral Economist, by any standard, formed the nucleus, of the engine room, of creative policies, that stabilized and positively drove Nigeria’s economy, such that, despite our International Pariah Status, and the trade and economic sanctions imposed, in response to Abacha’s dictatorship, Nigeria’s economy was positively turned around and moved from minus 2.0 per cent growth in 1993, to minus 0.1 per cent by 1995; thereafter in 1996, the economy grew steadily by 4.2 per cent, and remained above 2 per cent until 1999!

    Furthermore, the Consumer Price Index, also dropped from over 57 per cent in 1993 to 10 per cent in 1998; while, inflation receded further to 6.6 per cent by 1999.

    Similarly, the Naira remained stable at N82/$ for over 4 years, even, with modest crude oil prices between $14-22/barrel; Nigeria’s forex reserves, also, exceeded $4bn, while another $3bn surplus was consolidated in a newly designated Excess Crude Account!

    Arguably, the astute economic management which stabilized the Naira between 1994-1998 is certainly elusive today; the Naira rate has since plummeted, to N305-360=$, even though crude oil, (the subsisting mainstay of Government’s annual income) has, largely, remained above $40/barrel, with average output of about 2million barrels/day.

    The preceding intervention of Tony Ani is therefore timely. It would, indeed, be inexplicable, if the EFCC and other investigative Agencies of Government, pretend that the law has not been broken in the manner in which CBN, the Money Deposit Banks, MoneyGram and Western Union, collude to usurp the substantial dollar inflow that could quickly firm up the Naira, and plug the drain pipe of fuel subsidy; evidently, a much stronger Naira would significantly increase purchasing power, in every household and ultimately drive vibrant consumer demand, that would encourage manufacturers to increase production and create more jobs!

    Curiously, though, on closer examination, CBN’s policies overtime have always seemed designed to featherbed the banking sector to the detriment of the real sector, particularly, SMEs and close to 200million other Nigerians. Alarmingly, in addition to the annual ‘theft’ and diversion of the lifeblood of billions of Diaspora dollars into private accounts, the CBN confirmed in 2006, that it had also dashed 14 banks about $7bn. It is likely, that after the sudden disbandment of the Vice President’s Special Investigative Panel, the result of the investigation of this $7bn scam may, sadly, never see daylight.

    Ultimately, the question must be, whether or not we can confront the truth and engage in best practice policies to salvage our economy, or, whether we are determined, instead, to consciously sustain the oppressive and obtuse, strategy that has continuously pauperised our people, when, in practice, the converse benefits of increasing employment and inclusive growth could have been our portion?

  • $26bn Diaspora remittances: Where are the dollars?, By Henry Boyo

    $26bn Diaspora remittances: Where are the dollars?, By Henry Boyo

    It is now common for thousands of families across Nigeria to be regularly blessed with foreign exchange remittances from their children or relations, who have abandoned the country in search of greener pastures abroad. Notably, such remittances to Nigeria now reportedly exceed $25bn annually.

    This value exceeds 50 percent of Nigeria’s reserves of $40bn and also more than the Federal Government’s annual aggregate revenue in recent years. Instructively, therefore, if the Diaspora remittances are sensibly infused into the economy, the considerable additional forex inflow would strengthen the naira exchange rate to bolster consumer demand and stimulate expansion in production and employment.

    Conversely, however, despite the steady increase in the Diaspora inflow, there is no observable positive impact on Government’s annual expenditures or in the consumer expenditure of most households. Consequently, Diaspora remittances have inexplicably failed to meet the expectation that higher foreign exchange inflows would bolster the economy of recipient nations.

    Conversely, studies by various international research organisations, in fact, suggest that with the exception of China and India, higher Diaspora remittances are often indicators of weaker and challenged economies. Consequently, Nigerians may not ‘unduly’ celebrate increasing Diaspora remittances, which are identified as an abiding feature of failing economies.

    Indeed, since the Diaspora remittances seem to have become a double-edged sword, the moral of the link between higher remittances and lower Gross Domestic Product is that such remittances may ultimately deepen poverty, as it underscores an unceasing exodus of able-bodied and qualified professional migrants, who are compelled by scare employment opportunities and the ravages of high inflation rates and a weak currency, to presumably leave behind the less ambitious, less able and less qualified citizens who cannot migrate, to grow the home economy.

    Notably, the above inverse relationship between higher levels of Diaspora remittances and lower GDP does not, however, explain why bigger inflows of such remittances do not impact positively on the exchange rate of those labour/professional manpower exporting countries. For example, there is no real indication that higher Diaspora remittances have ever made any positive economic impact to strengthen the naira’s exchange rate. Furthermore, the combination of the Central Bank Nigeria’s $45bn present foreign reserves, in addition to over $25bn annual Diaspora remittances, have unexpectedly failed to produce a stronger naira exchange rate or meaningfully impact Nigeria’s economy. Curiously, it is as if higher Diaspora dollar remittances don’t even exist. The obvious question is, why is this so?

    Evidently, the dollar reserves, which the CBN regularly auctions to banks and also allocates at face value to over 3,000 Bureau-De-Change operators and banks, are primarily derived from government’s dollar receipts from crude oil and not from Diaspora remittances, which seem to have become an illusion as a national asset.

    Obviously, such Diaspora dollar inflows inexplicably never seem to positively impact on the naira rate, as these forex values remain domiciled abroad and become privately managed by banks and other licensed money transfer agents as ‘private’ assets.

    Incidentally, this writer recalls a chance meeting with a classmate, a few months ago. He was apparently agitated that his bank always paid him at the rate of $1 to N305 for the monthly dollar remittances, from caring family members who live abroad.

    My friend was also clearly agitated that he had unexpectedly become dependent on his children because inflation and a crippled naira rate had significantly eroded the value of the pension income that he consolidated with great sacrifice before retirement. This friend wondered why his bank did not pay him US dollar cash for these remittances, so that he could personally exchange same for much higher naira rates in the open market.

    The gentleman clearly felt betrayed by the system as he observed that the CBN did not forcibly auction its own dollars at N305 to $1; (about 20 per cent less than the BDC rate). So why must he be forced to change at such a huge discount?

    Ultimately, after several altercations with his bankers on the applicable exchange rate, he announced that he had given up and silently borne what he described as a CBN approved scam.

    My friend was advised to open a domiciliary account with any of the leading commercial banks in the country. He was also given the assurance that the foreign remittances from his children, thereafter, would be deposited within a week into his personal domiciliary account, from which he could actually withdraw dollars and change same at the prevailing N350-360 to $1 bureau-de-change rate.

    Naturally, he wondered why his bank did not, for so long, also inform him about this simple way out. However, he now suspects that the money transfer business brazenly rips off the actual beneficiaries of dollar remittances with the connivance of local banks.

    Similarly, hundreds of thousands of aged Nigerians pensioners may have also been robbed of over 20 per cent of the real value of the dollars regularly remitted to them by their children and other well-wishers and relations abroad.

    Evidently, the present and almost $26bn of Diaspora remittances are warehoused abroad and do not supplement the size of the CBN’s regular dollar auctions, which have clearly failed to drive down the dollar price, even when extended dollar reserves cover still remain domiciled with the apex bank.

    Arguably, therefore, the official strategy of deliberately sequestering Diaspora dollar inflow in overseas accounts, instead of the local forex market, is patently misguided and seriously injurious to our economy.

    Regrettably, the requirement for agents to pay naira for foreign denominated money transfers is underscored in paragraphs 4.3.1 and 4.3.2 of the CBN’s Guidelines on International Monetary Transfer Services. For example, paragraph 4.3.1 demands that for inward money transfer services, a money transfer operator shall “make payments to customers only in Nigerian Currency in line with CBN regulation”; while, paragraph 4.3.2 of the same guidelines, demand that the money transfer operator shall “use the prevailing exchange rate on the day the transfer is received”

    Obviously, my classmate will not be so distraught, if it is only mandatory that the money transfer operators (banks inclusive) should also adopt the “so-called” bureau-de-change rate for the conversion of the dollar sums, received from Diaspora Nigerians. But this is, unfortunately, not so.

    Furthermore, it is inequitable that the CBN should also formally allocate tranches of its dollar own reserves to bureau-de-change operators, who do not add any meaningful value to earn such a privilege, while parents and guardians, who actually made tremendous sacrifices to educate and train their children, become forced to incur a 20 per cent loss on the foreign remittances from their benefactors who live abroad.

    For the CBN to achieve its prime mandate of price stability and improve the lives of Nigerians, it is absolutely necessary for the bank to urgently restructure the Exchange Rate Payment Terms for Diaspora remittances to reflect equity across all platforms for forex revenue and sales. Arguably, in this process, stronger naira rates will emerge and reduce or indeed, totally eliminate the trillions of naira annually wasted for payments of fuel subsidy. The reported illicit daily outflow of 10 million litres of fuel, allegedly smuggled across Nigeria’s borders daily, will also be eliminated with a much stronger naira rate.

    Instructively, however, if Diaspora dollar remittances remain domiciled in overseas Nigerian bank accounts, the naira sums paid in exchange by agents and banks to local beneficiaries, will continue to be sourced easily from the same persistent excess naira supply that the CBN ceaselessly unleashes in the money market every time government’s dollar revenue is unilaterally substituted with naira by the apex bank at arbitrary rates.

    Consequently, Nigerian banks and their overseas agents ultimately become the inheritors of the $25bn Diaspora remittance, which they can deploy as they please without need to repatriate these dollars to grow the Nigerian economy. Ultimately, the loot from this RIP-OFF of the Nigerian people may be invested in huge assets abroad or it will be safely tucked out of sight in protected offshore secret accounts, which have become the graveyards for funds looted primarily from African origins.