According to a report by the International Nigerian Association, Nigerians have sent $ 34 billion in remittances each year, which easily surpasses previous record of $ 25 Billion. However, the majority of these funds don’t appear to be entering the domestic forex market.
Two years ahead of time, objective achieved
This increase was attributable to the Central Bank of Nigeria (CBN’s) ‘naira-for-dollar’ incentive program. It once again highlights the importance of diaspora sending remittances into the most populous country. From Africa.
Biodun Adedipe (economist at Adedipe Associates Limited) CiteThe CBN’s incentive program may be the reason that the $ 34 billion annual diaspora remittances target was achieved two years earlier than expected.
Despite this sharp rise in remittances from Nigeria, Nigeria still faces foreign exchange shortages. These currency shortages contribute to the depreciation and rise in inflation.
The Nigerian foreign currency market is not affected by the dollars sent.
Adedipe attempts to explain why Nigeria has not taken full advantage of the rise in remittances. Adedipe points out the fact that a large percentage of the dollars sent does not end up in Nigeria’s forex market. Adedipus explained:
If someone wants to send money to their relatives in Nigeria, they might have $ 10,000 in the USA and want to transfer the equivalent in Nigerian naira to them. This works in most countries. Normally, $ 10,000 will be entered the forex market in Nigeria and provide a supply boost.
Adedipe explains that this is not true because “the reality in Nigeria’s position the dollar isnt going where he is.” “The person who provides the naira equivalent prefers to keep it outside, so that it doesn’t enter the forex market here in Nigeria,” Adedipe said. Adedipe says that Nigerian authorities should now seek ways to “make it more attractive” for the repatriation currency generated at home by Nigerian migrant workers.
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