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)
Economic growth in Africas largest economies improved in the second quarter of 2017 (2017Q2) relative to the preceding quarter (2017 Q1), as Nigeria and South Africa exited recession. Specifically, GDP growth rate was 0.55 percent and 1.1 percent for Nigeria and South Africa in 2017Q2, compared to 0.91 percent and 0.7 percent in 2017Q2, respectively. The increased growth in Nigerias economy was driven by improved performance in the oil sector (increased crude oil price and production) which offset the decrease in non-oil sector growth, while South Africas emergence from recession is supported by growth in its agriculture sector complimented by growth in finance, real estate, business service, mining and quarrying sectors.
International Monetary Fund (IMF) revised down growth forecast for Sub-Saharan Africa by 0.2 percentage points, while retaining growth estimates for Nigeria and South Africa in 2017. Precisely, growth rate forecast for Africa was reduced from 2.8 percent in January 2017 forecast to 2.6 percent in April 2017 forecast while growth estimates were retained at 0.8 percent for both South Africa and Nigeria. In contrast, global economic growth outlook was increased by 0.4 percentage points from 3.1 percent to 3.5 percent within the same period. Growth in Sub-Saharan Africa is hampered by adverse cyclical and supply side factors, weak fiscal buffers and rising public debt amongst non-commodity exporters as well as severe drought was experienced in Eastern and Southern Africa