The Central Bank of Nigeria (CBN) attributed the ongoing depreciation of the Naira against the US Dollar to the prevalence of unofficial diaspora remittances.
This was stated by the acting governor of the central bank, Folashodun Shonubi, during his delivery of a Distinguished Personality lecture titled “Diaspora Remittances and Nigeria’s Economic Development” at the National Institute for Security Studies in Abuja.
The lecture was aimed at members of the Executive Intelligence Management Course (EIMC) 16.
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Shonubi’s remarks came after reports indicated that the Naira had reached a historic low of N925/$1 on the parallel market, due to a higher demand for foreign currency compared to its supply. This situation emerged following the liberalization of the foreign exchange regime, which marks a departure from the policies implemented during the administration of President Muhammadu Buhari.
Shonubi clarified that a significant portion of diaspora remittances arrives in Nigeria in the form of dollars and remains unrecorded in official channels, making its way to the black or parallel markets. He emphasized that these funds are not seen within the official system, raising questions about their destination.
He noted, “The challenge with the black market, unofficial market, or parallel market, is that it is not regulated, and it becomes an easy place for criminal activities. Some of the funding in the black markets actually comes from diaspora remittances.”
He stressed the importance of understanding the dynamics of these flows and controlling illegal remittances to ensure that they are directed into proper channels to benefit the economy.
Shonubi highlighted that many countries, including developed ones like India and China, rely heavily on remittances as a major source of income. He expressed the need for Nigeria to tap into this potential, suggesting that measures be taken to identify and regulate these channels to maximize economic growth. He also acknowledged that diaspora remittances have exceeded contributions from the construction industry in 2021.
Furthermore, Shonubi discussed the challenges posed by the black market in managing foreign exchange rates and emphasized that diaspora remittances play a crucial role in the economy. He concluded by urging collaboration to ensure that remittance flows are directed towards proper channels to benefit the economy effectively.
