The CBN body has before expressed concerns regarding cash remittance in Nigeria as well as cross-border transactions. The results showed significant dips. This had made the CBN encourage locals to rather indulge in traditional means of cash transactions as withdrawal from official systems have depreciated revenue generation towards the Nigerian economy.
Major Updates
- Cash remittances rates are declining majorly due to cryptocurrencies.
- Agusto predicted higher remittance rates in 2021.
- Remittance rates have been declining over the past three years.
It has been found by Lagos-based business management, research and consultancy firm Agusto that Nigeria experienced significantly lowered rates of cash remittance flow. The study is centered around the global pandemic and lockdown of 2020.
A survey was carried out by the firm with Nigeria amongst other African nations including Morocco, Ghana, Kenya, Egypt, Zimbabwe, and Senegal during the COVID-19 lockdown last year. The report was to analyze the rate of cash flow and remittance and unfortunately, Nigeria was placed last.
However, the firm has predicted by this year the rates would most likely increase since receivers of the funds have now enabled access to receive foreign currencies.
Another reason for his prediction is the increased migration of literate Nigerians out of the country. Stimulus packages would also do well to contribute to the increased capital rates in Nigeria.
One prominent cause of the significant dip is the rate of inflation of the local Nigerian currency. Naira depreciation has been a huge challenge within the country. This has resulted in many citizens relying on cryptocurrencies as an alternative means of wealth asset and spendable currency.
The rate of cash remittance from last year was recorded to be US$21 billion. This was a significant difference from previous years as 2019 recorded a total of US$23.8 billion and 2018 recorded a total of $24 billion.
Agusto predicted numbers would rebound to around US$22.5 billion by the end of the year.
Conclusion
The major dip in Remittance rate has been predominantly associated with the rise and widespread concept of cryptocurrencies. As many citizens withdraw from official systems to cheaper and more efficient alternatives, it pushes away cash flow from the economy and towards these alternatives.
For Nigerians, this has been associated with the crypto mania that has been on the rise for years now.
Question of the Day
Do you think Agustin is right about remittance flows improving this year?
