The total direct remittance inflow into Nigeria has declined considerably, falling by 50% from US$2.04 billion to US$1.01 billion between January and February 20201. This is significantly lower than 2019 levels, as a total of US$23 billion was remitted in 2019, making Nigeria the highest recipient within the sub-Saharan African region2. However, with many of its citizens resident in the diaspora residing in countries that have been severely hit by the COVID-19 pandemic including Spain, Italy, the United Kingdom and the United States, their ability to work and thus remit funds has been significantly limited. Given that remittance is a major source of income for vulnerable households in developing countries, this recent development could increase poverty and further widen inequality. In the coming months, remittance flows are expected to continue declining as a recent World Bank report noted that flows to low- and middle-income countries in sub-Saharan Africa will fall by 23.1% in 20202. In order to mitigate against the impact on vulnerable households, the government should provide additional social safety nets for the poor and ensure that the distribution mechanism of the cash transfer programme is efficient and equitable.
May 19, 2020
Nigeria Economic Update (Issue 17)
OPEC weekly basket price reduced from $61.14 to $60.73 per barrel (December 1 8, 2017). Similarly, Global oil benchmark crude sold for as low as $61.22 per barrel during the week, down week-on-week by 1.8 percent. Nigerias Bonny light declined slightly by approximately 1 percent to $63.534. The fall in crude prices came after a sharp rise in U.S. inventories of refined fuel, which suggested that actual demand may be weakening5 (the EIA data shows an increase of 8.5 million barrels of stored fuel). Given that crude oil revenue remains critical to Nigerias budget performance, investments aimed at improving growth and competitiveness of other key sectors is essential to minimize distortions on budgetary expenditure.
Recent media highlights suggest that there is a prospective decrease in Nigerias budgetary benchmark crude oil production. Precisely, the 1.8 million barrels per day proposed at the Joint OPEC and Non-OPEC Ministerial Monitoring Committee (JMMC) meeting, is 18.2 percent lower than the budgetary production benchmark of 2.2 million barrels per day. This followed OPECs recent review to include Nigeria in the ongoing production cut agreement amid concerns of global oil market oversupply, given the constant production increase from Nigeria over the last few months.