Dike Onwuamaeze writes on efforts to increase the flow of Diaspora remittances into Nigeria in particular and Africa in general
The Global Director of the Social Protection and Jobs Global Practice at the World Bank, Mr. Michal Rutkowski, recently highlighted the importance of remittance flows to the financial survival of families that were stricken by the impact of COVID-19 pandemic disease that plagued the world economy in 2020.
Rutkowski, said in the World Bank’s report titled: “Defying Predictions, Remittance Flows Remain Strong During COVID-19 Crisis,’” released recently, that, “as COVID-19 still devastates families around the world, remittances continue to provide a critical lifeline for the poor and vulnerable. Supportive policy responses, together with national social protection systems, should continue to be inclusive of all communities, including migrants.”
The World Bank’s release also stated that Nigeria accounted for 40 per cent of remittance flows into Sub-Saharan Africa in 2020 by receiving over $16 billion out of an estimated inflow of $42 billion to Africa.
The bank forecasted in the report that global remittance flow to low- and middle-income countries would increase by 2.6 per cent to $553 billion in 2021 and by 2.2 per cent to $565 billion in 2022.
It stated: “In 2021, remittance flows to the region are projected to rise by 2.6 per cent, supported by improving prospects for growth in high-income countries. Data on remittance flows to Sub-Saharan Africa are sparse and of uneven quality, with some countries still using the outdated Fourth IMF Balance of Payments Manual rather than the Sixth, while several other countries do not report data at all.
“High-frequency phone surveys in some countries reported decreases in remittances for a large percentage of households even while recorded remittances reported by official sources report increases in flows.”
The bank attributed the shift from informal to formal remittance channels to the closure of borders, which explained in part the increase in the volume of remittances recorded by central banks.
In Nigeria, the Central Bank of Nigeria (CBN) recently introduced series of reforms that would encourage remittances inflow into the country through the money deposit banks (DMB).
In line with this initiative, all recipients of diaspora remittances through CBN’s licensed International Money Transfer Operators (IMTOs) would be paid N5 for every $1 received as remittance inflow.
The apex bank had explained in the circular, “The CBN shall through commercial banks, pay to remittance recipients the incentive of N5 for every $1 remitted by sender and collected by the designated beneficiary.
“This incentive is to be paid to recipients whether they choose to collect the United States dollar as cash across the counter in a bank or transfer same into their domiciliary account. In effect, a typical recipient of diaspora remittances will at the point of collection, receive not only the USD sent from abroad, but also the additional N5 per USD received.”
Providing more insight into the new policy, Emefiele had said it would offer Nigerians in the diaspora a convenient way to send remittances, adding that it would also aid diaspora investments.
He explained, “Our policy on the administration of remittance flows is aimed at increasing the transparency of remittance inflows, reducing rent-seeking activities, and providing Nigerians in the diaspora with cheaper and more convenient ways of sending remittances to Nigeria.”
However, Emefiele said, “Yet, the introduction of the new policy presented new challenges, as operators and remittance service providers were initially unable to integrate with the agent banks.”
Accoring to Emefiele, the reforms were introduced because increased diaspora remittances into the country would support the economy and help reduce the impact of the COVID-19 pandemic on the Nigerian economy.
He stated that inflows of about $10 billion to $15 billion would have significant effect on the economy.
Emefiele said: “Since I became the CBN governor, I have been hearing about the size of diaspora remittances; some say $20 billion; in fact some say it’s about $30 billion. Honestly, I have been looking for the $30 billion or $20 billion, I have not seen it.
“But this time I have decided that I will focus to see those billions of dollars. You know what, I am not only expecting $20 billion, if we get even up to $10 to 15 billion, I can tell you it can help the Nigerian economy.
“Pakistan, Indonesia and others generate average of $2 billion monthly in diaspora remittances and this has helped to reduce the impact of COVID-19 on their economy.”
Among the Nigerian commercial banks that have keyed into the central bank’s vision of increasing diaspora remittances via the formal channel is the United Bank for Africa (UBA).
UBA has its own proprietary remittance product called Africash. The service allows account and non-account holders send and receive money across UBA 20 African country locations. The organisation also facilitates remittances across Africa by allowing its account holders, through the UBA Connect service access their account within the 20 countries it operates
These money transfer services were developed by the UBA to aid money transfer across Africa. The bank said that a client could use the AMTS deposit, transfer and withdraw cash in local currencies across 20 African countries.
Similarly, the Africash would enable the UBA’s account and non-account holders to send and receive money in local currency from all of the bank’s branches in Africa.
But transactions under this product would require a duly filled Africash form, the Bank Verification Number (BVN), a savings/current account with the bank. But non-account holders would be required to have a valid means of identification while the receiver should have the PIN code provided by the sender to collect funds.
Moreover, the UBA Connect, according to the bank, “allows our esteemed customers the option of sending or receiving money across 20 African countries with ease. This service is also available to account and non-account holders of the bank.”
However, they must arm themselves with a duly completed UBA Connect send, receive or transfer form as well as a valid means of identification, which could be an international passport with visa or migration stamp for members of the Economic Community of West African States (ECOWAS).
The bank explained: “As part of our goal to become the number one bank in terms of customer satisfaction and in line with our customer first philosophy, the UBA has partnered with top international money transfer operators and have created an Africa money transfer service to ensure you can conveniently send and receive money from anywhere in the world.
“Through our remittance partners, you can receive money directly into your UBA account or pick up cash at any of our branches nationwide.”
Currently, the UBA is also collaborating with 14 International Money Transfer Partners (IMTP) in a bid to ensure the ease and convenience of transfers from anywhere in the world.
The money transfer partners the bank is working with are the MoneyGram, the Western Union, Ria Money transfer, World Remit, Flutter Wave, AFTAB (Ace Money Transfer) and the Cash Pot.
Others are Colony Capital (Fincode), Swift Payment, Naira Gram, IDTPS Boss Resolution, SmallWorld, Sendwave and Omnex.
Some of the basic futures of the IMTP are safe and secured services that allow the beneficiaries receive transfers within minutes. Their services are also available to the UBA account and non-account holders at competitive rates and fees.
They also allow customers to receive their money in Naira or Dollars.
The World Remit transfer operator has no minimum amount for transfer. However, the initial transaction is subject to a maximum of $2,000, while the maximum limit per transaction is $7,500. But the total transaction must not exceed $50,000 every six months. It attracts no charges to the beneficiaries.
The AFTAB (Ace Money Transfer) has no minimum or maximum limit when it comes to sending money with ACE.
One of the uniqueness of the UBA’s remittance services is that they do not require tedious conditions from clients to either send or receive money through its IMTO partners.
Its basic requirements for intending beneficiaries are a duly completed form indicating ones preferred IMTO service provider. Others are Bank Verification Number (BVN), a savings or current UBA account, valid means of identification for non-account holders, which could either be a National I.D card, international passport, drivers licence or Nigerian voters card.
Scope of Remittance Services
The President of Afreximbank, Dr. Benedict Oramah, has suggested that diaspora’s participation in the Nigerian economy could be enhanced through specialised funds and accounts that would encourage them to save their long-term funds in Nigeria.
He said: “Africans and Nigerians can consider allowing special diaspora foreign currency accounts with higher interest rates than the US or Europe and with an inbuilt guarantee against potential losses from bank failures and country risks.
“Afreximbank would be happy to work with authorities to put in place a country risk guarantee that can be retailed to diasporans depositing money in such foreign currency account. We have done something similar in Zimbabwe.
“Secondly, designated commercial banks may be encouraged to implement diaspora targeted certificates of deposits that can be liquidated in local currencies or foreign currencies with built in incentives to encourage liquidation in local currencies.
“Thirdly, is a properly structured diaspora fund that can be issued with eligible bond holders encouraged to open coupon payment accounts locally in Nigeria to enable them cover local expenses and support their relatives at home.”
Oramah stated that by creating the requisite environment, diaspora remittances could become a catalytic force that would break the development barriers and rapidly transform the country and the continent.
