TheCable

The COVID-19 pandemic has put Nigeria’s second-largest revenue source at risk, an analysis by SBM Intelligence has shown.

Diaspora remittances from citizens living overseas have formed a major part of Nigeria’s forex earnings; even higher than tax revenue.

This is, however, second to revenue realised from selling crude oil which is Nigeria’s main source of forex earnings.

Lockdowns imposed across the world to control the spread of the coronavirus have affected the many jobs with 36.5 million Americans filing for unemployment claims in the past eight weeks.

“With the global economy expected to contract by up to 3% in 2020 following lockdowns in various countries and a slowdown of trade across the globe, migrant workers are unlikely to send as much money home because their employment and pay is vulnerable,” SBM Intelligence said.

“World Bank studies show that remittances augment income and help put many in the lower- and middle-income countries above the poverty line.

“The fall in diaspora remittances will hit Nigeria particularly hard as this constitutes the second-largest revenue source for the country after oil, by far exceeding tax revenues.”

Before the pandemic hit, PwC had estimated that remittances to Nigeria would hit $29.8 billion by 2021 and $34.89 billion by 2023.

According to data provided by the World Bank, Nigeria received $22 billion in diaspora remittances in 2017 alone.

In 2018, it was estimated that remittances (money transfers) from Nigerians abroad was about US$23.12 billion.

According to the World Bank, remittances through official channels are much lower than the actual remittances that take place through official and unofficial channels.

It said remittances through informal channels could add at least 50% to the record, hence the reported remittances are via legitimate means.