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Remittance flow to Nigeria declined by 27.7 per cent in 2020, according to the latest Migration and Development Brief report of the World Bank. The sharp reduction in the money sent by Nigerian migrants to the country accounted for the overall decline of about 12.5 per cent in remittances sent to Sub-Saharan Africa (SSA) during the year.

Nigeria accounted for over 40 per cent of the $42 billion remittances received in SSA countries during the year. According to the report, remittances to SSA increased by 2.3 per cent, when the data for Nigeria is excluded.

Officially recorded remittance flows to low- and middle-income countries reached $540 billion in 2020, just 1.6 per cent below the 2019 total of $548 billion, despite the acute economic impact of the COVID-19 pandemic. The marginal decrease was lower than was projected because of the pandemic, and smaller than the 4.8 per cent decline in remittance flows during the 2009 global financial crisis.

The decline in remittance flows in 2020 was also far lower than the fall in foreign direct investment (FDI) flows to low- and middle-income countries, which, excluding flows to China, fell by over 30 per cent, according to a statement by the World Bank. As a result, remittance flows to low- and middle-income countries surpassed the sum of FDI ($259 billion) and overseas development assistance ($179 billion) in 2020.

The main drivers for the steady remittance flows included fiscal stimulus that resulted in better-than-expected economic conditions in many host countries, a shift in flows from cash to digital and from informal to formal channels, and cyclical movements in oil prices and currency exchange rates. The true size of remittances, which includes formal and informal flows, is believed to be larger than officially reported data, though the extent of the impact of COVID-19 on informal flows is unclear.

“As COVID-19 still devastates families around the world, remittances continue to provide a critical lifeline for the poor and vulnerable,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank. “Supportive policy responses, together with national social protection systems, should continue to be inclusive of all communities, including migrants.”

In 2020, remittance inflows rose by 6.5 per cent in Latin America and the Caribbean, 5.2 per cent in South Asia, and 2.3 per cent in the Middle East and North Africa. However, remittance flows fell by 7.9 per cent in East Asia and the Pacific, and 9.7 per cent in Europe and Central Asia.

The relatively strong performance of remittance flows during the COVID-19 crisis has also highlighted the importance of timely availability of data, according to the World Bank. Given its growing significance as a source of external financing for low- and middle-income countries, there is a need for better collection of data on remittances, in terms of frequency, timely reporting, and granularity by corridor and channel.

“The resilience of remittance flows is remarkable. Remittances are helping to meet families’ increased need for livelihood support,” said Dilip Ratha, lead author of the report on migration and remittances and head of KNOMAD. “They can no longer be treated as small change. The World Bank has been monitoring migration and remittance flows for nearly two decades, and we are working with governments and partners to produce timely data and make remittance flows even more productive."

The World Bank said it is assisting member states in monitoring the flow of remittances through various channels, the costs and convenience of sending money, and regulations to protect financial integrity that affect remittance flows. It is working with the G20 countries and the global community to reduce remittance costs and improve financial inclusion for the poor.

With global growth expected to rebound further in 2021 and 2022, remittance flows to low- and middle-income countries are expected to increase by 2.6 per cent to $553 billion in 2021 and by 2.2 per cent to $565 billion in 2022. Even as many high-income nations have made significant progress in vaccinating their populations, infections are still high in several large developing economies and the outlook for remittances remains uncertain.

The global average cost of sending $200 remained high at 6.5 per cent in the fourth quarter of 2020, more than double the Sustainable Development Goal target of 3 per cent. Average remittance costs were the lowest in South Asia at 4.9 per cent, while Sub-Saharan Africa continued to have the highest average cost at 8.2 per cent. The World Bank said supporting the remittance infrastructure and keeping remittances flowing includes efforts to lower fees.