CBN And The $2.6bn Or $26bn Diaspora Remittances

Central Bank of Nigeria.

In the World Bank’s 2018 report, titled, “Nigerians Living abroad sent $22bn home in 2017”, the Bank noted that the top recipients of the Diaspora remittances in the world were India with $69bn, Chile ($64bn), Philippines $33bn, Mexico $31bn, Nigeria $22bn and Egypt $20bn. Notably, however, sub-Saharan Africa attracted the most expensive average remittance cost at about 9.4 per cent, compared with the global average of 7.1 per cent. The cost of remittances for Nigerian beneficiaries, clearly, exceeded 19 per cent as N305=$1 instead of N360=$1, is ultimately paid to recipients locally.

Furthermore, in article titled, “Diaspora remittances 2015-2018: Positive indication on human capital development”, by Donald Inwalomhe, in The Guardian Newspaper of June 18, 2019, the author noted that “data from the CBN with regard to Diaspora remittances had outpaced oil revenue in 2015 as $21.2bn was officially sent home by Nigerians abroad, compared with $19.6bn oil export proceeds. Similarly, Nigeria’s Diaspora remittances in 2016 and 2017 were $19.7bn and $22bn respectively, compared with oil export revenue of $10.4bn and $13.4bn.” The Guardian report also noted that the CBN’s Annual Economic Data confirms that “the oil revenue was $18bn while Diaspora remittances amounted to $25.1billion in 2018. This value confirms Nigeria as the number one African country and among the top five countries globally for such remittances” which the CBN indicated “were equal to 5.6% of Nigeria’s GDP in 2017!”

The PwC, an international intervention conglomerate, also reported that 2018 Diaspora remittances amounted to 14 per cent, higher in 2017, and seven times the total foreign aid of about $3.359bn to Nigeria. The PwC report also confirmed that the 2018 remittances of $25bn represented 6.1 per cent of Nigeria’s GDP, and 11 times the value of Foreign Direct Investment, but were equal to 84 per cent of 2018 budget. Consequently, it expressed concern that “one may never know or be privy to the fundamental reasons why Nigerian governments have serially failed to harness the significant human and material capital of the Diasporan communities as catalysts for our developmental aspirations, as some other countries have successfully done”!

Incidentally, on Saturday, October 12, 2018, Andrew Nevin, the PwC Chief Economist, expressed this same view on Channels TV, Sunrise Daily programme, when he emphasised the need to create a Special Purpose Vehicle to transform Nigeria’s economy and GDP with the significant annual harvest from the Diaspora.

There is clearly an indisputable consensus, up to this point, between the World Bank reports, and the CBN and the PwC official estimates on the value of Diaspora remittances.

Inexplicably, however, the CBN’s record of the value of these remittances seems to have changed radically, if the report in the ThisDay Newspaper of Sunday October 13, 2019 titled, “CBN clarifies Diaspora remittances; says official inflow is $2.6bn, not $26bn” is anything to go by.

The CBN’s unexpected pushback was published barely seven days after Anthony Ani, who was the finance minister from 1993 to 1998, queried the present destination of Diaspora dollar remittances, in a rejoinder to my article titled, “$26bn Diaspora remittances: Where are the dollars?” In that article, Ani alluded to the alleged abuses identified by this columnist in The PUNCH edition of September 9, 2019.

Curiously, the former minister believes that these remittances are massively laundered by Nigeria’s banks. He explained that, “When in 1995 we at the Ministry of Finance reviewed the country’s sources of foreign revenues, we found out that nothing was coming in from Nigerians in the Diaspora, whereas India and Jamaica were living on foreign exchange from their citizens abroad. When I enquired why Western Union and MoneyGram could not receive money from Nigerians abroad, I was told that it was due to our tax laws.”

This development, according to Ani, necessitated the change in Nigeria’s tax laws to accommodate those in the Diaspora. Expectedly, with the enactment of new tax laws in 1996, Diaspora remittances have increased, exponentially.

However, the former minister is categorical “that Diaspora remittances are not presently domiciled in Nigeria and therefore observed that there is collaboration between the CBN, Nigerian banks and Western Union/MoneyGram to retain the dollars abroad”. Consequently, he advised that government must investigate the infraction, punish money launderers, and recover all past Diaspora remittances retained abroad!

However, in an unexpected somersault on its earlier favourable reports on Diaspora remittances, Mr. Isaac Okorafor, Corporate Communications Director of the CBN, has surprisingly, queried the sources of data being referenced by critics. According to Okorafor, the 2018 data purported to be from the World Bank, “had earlier, also, been queried by the CBN’s Monetary Policy Committee”, because they did not reflect the actual amount of inflows from abroad. Okorafor therefore cynically reported that “we are looking for the so-called $26bn Diaspora cash, because such cash will impact positively on our reserves!” He, according to the same newspaper report, therefore chuckled at those bandying such figures and advised that an understanding of the methodology through which the data were sourced could provide an insight into why critics’ Diaspora figures might be off the target! Okorafor also claimed that instances of such inaccurate statistics further lent credence to the recent call by President Muhammadu Buhari that homegrown data should predicate the policy recommendations of its latest Economic Advisory Council!

Indeed, President Buhari recently faulted the statistics on Nigeria produced by the IMF/World Bank, and described them as wild estimates, while Okorafor, similarly, observed that the IMF and the World Bank have also churned out data, suggesting structural weaknesses in Nigeria’s economy and, therefore, advised government to activate urgent reforms.

Okorafor also suggested that “the calculation of remittances by these foreign bodies usually includes data from inward official sources like Western Union, as well as money/cash being brought by Diaspora Nigerians, coming home for any social or family function. For example, he explained that “my brother is in the USA, wants to send money home but has a friend in Lagos. That friend in Lagos wants a shoe from Harrodsburg. The friend in London uses his credit to buy the shoe in Harrods’, and (then) sends it to Lagos and tells the guy in Lagos to (then) give the naira equivalent to the Diaspora’s relative in Lagos.” The same (exchange) process is similarly adopted, according to Okorafor, for goods bought in Nigeria by Nigerians migrants in China.

In such an event, the CBN Director explained that, “now, when the World Bank sums up the dollar value of all these various activities, they say we receive Diaspora remittances of $26bn. I’m disappointed that enlightened people could now say remittance is $26bn; this gives the impression as if the CBN has it in its pocket.” In practice, it is not unusual for the Federal Government and foreign bodies to differ on such data; for example, government and the World Bank also differed recently on the source and value of spending on social safety nets, which the World Bank claims, is funded primarily from development/aid partners.

The Minister for Finance/Budget and National Planning, Mrs. Zainab Ahmed, also differed with the World Bank on sources for funding Nigeria’s social investment programmes. The minister explained that “Nigeria’s intervention programmes, conversely, include pension, health and disability insurance programmes and several other programmes that other countries put together and highlight.”

Ultimately, however, irrespective of the above differences, the CBN should defend its earlier celebrations of Nigeria’s premium rating in the value of diaspora remittances to Africa and also explain why Nigerian beneficiaries of even its reported modest $2.6bn were not paid in dollars by respective banks!

If the CBN is unable to respond, in plain language, to allegations of massive money laundering, by banks, with Nigeria’s diaspora remittances, then, it would be inevitable to conclude that it is possibly also involved in a massive cover-up. What a shame this will be, if it is so!