Despite the pandemic, diaspora remittances to Sub-Saharan Africa (excluding Nigeria) in 2020 increased by 2.3%, World Bank reports. When remittances to Nigeria are considered alongside its Sub-saharan peers, the figures declined by 12.5%.
Remittances to Nigeria makes 40% of the total remittances to Sub-Saharan Africa and remittances to the country declined by 27.7% within the period. This immense contraction in Nigeria’s receipts from the diaspora reversed the total Sub-saharan Africa’s remittances by 14.8%.
In a release titled ‘Defying Predictions, Remittance Flows Remain Strong During COVID-19 Crisis’, the bank noted that remittances to Sub-Saharan Africa declined by an estimated 12.5 percent in 2020 to $42 billion. The decline was almost entirely due to a 27.7 percent decline in remittance flows to Nigeria, which alone accounted for over 40 percent of remittance flows to Sub-Saharan Africa. Remittance growth was reported in Zambia (37 percent), Mozambique (16 percent), Kenya (9 percent) and Ghana (5 percent).
In 2021, remittance flows to the region are projected to rise by 2.6 per cent, supported by improving prospects for growth in high-income countries.
The world bank also noted that Despite COVID-19, remittance flows remained resilient in 2020, registering a smaller decline than previously projected.
Officially recorded remittance flows to low and middle-income countries reached $540 billion in 2020, just 1.6 percent below the 2019 total of $548 billion, according to the latest Migration and Development Brief.
This 1.6% decline in recorded remittance flows in 2020 was smaller than the one during the 2009 global financial crisis, which was 4.8 percent. This rate of decline in remittances was also far lower than the fall in foreign direct investment (FDI) flows to low and middle-income countries (excluding China), which fell by over 30 percent in 2020.
Notably, the remittance flows to low- and middle-income countries surpassed the sum of FDI ($259 billion) and overseas development assistance ($179 billion) to the countries in 2020.
The main drivers for the steady inflow of remittances included fiscal stimulus that in turn resulted in better-than-expected economic conditions in host countries. It could also be attributed to a shift in flows from cash to digital and from informal to formal channels, plus the 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.”
Remittance inflows rose in Latin America and the Caribbean (6.5 percent), South Asia (5.2 percent) and the Middle East and North Africa (2.3 percent). However, remittance flows fell for East Asia and the Pacific (7.9 percent), for Europe and Central Asia (9.7 percent), and for Sub-Saharan Africa (12.5 percent).