Nigeria launches N5 for every $1 scheme

Nigeria launches N5 for every $1 scheme

With the intention to strengthen Naira and encourage diaspora remittances to the country, Nigeria’s Central Bank, the Central Bank of Nigeria (CBN) has introduced a scheme that would offer a reward of five naira for every $1 sent by Nigerians living abroad through international money transfer operators in the country in what it calls “naira for dollar”.

It is a step that shows Nigeria’s reliance on diaspora remittances, which has dipped over the last year, likely due to the impact of the Covid-19 pandemic on the earnings of Nigerian migrants.

Diaspora remittances to the country totalled $25bn (£18m) in 2019 but dipped to just over $5.3bn in 2020, according to data from the Central Bank of Nigeria.

Nigeria depends on diaspora input to such an extent that in 2018 when the country recorded $23.5bn in remittances, it was 83% of that year’s budget, 6.1% of the GDP and 11 times higher than the foreign investment flows in the same period, according to management consultancy firm PricewaterhouseCoopers.

The central bank is targeting at least $2bn monthly in diaspora remittances in 2021, but a report by the African Growth Initiatives suggests that sub-Saharan Africa could record a further reduction in remittances by up to $3bn this year.