Recently, Nigeria has experienced an almost 100% per cent decline in the naira’s value compared to the 471/dollar rate which the national currency previously closed at in the I&E Window, Data from the FMDQ Exchange showed.
However I read with consternation an absurd claim by the acting CBN Governor that Diaspora remittances are to blame for the record-breaking high exchange rate of $1=N950 at the parallel market.
It appears that the era of blame game Olympics continues in Nigeria’s misgovernance . They can’t blame the previous APC government so they chose hardworking Nigerians abroad as scapegoat for their wrong actions.
According to media reports, he said,
_“Some of the funding in the black markets are actually from diaspora remittances. That’s why it important we need to know a lot of what’s going on there. We can’t play the sentiment game…_ https://barristerng.com/why-naira-continues-to-fall-cbn/
How can he blame Diaspora remittances which has existed for decades as being responsible for the massive devaluation of the naira that occurred under the current two-month old regime?
For the avoidance of doubt, Diaspora remittances was identified and instituted as a strategic forex acquisition policy by Anthony Ani, Abacha’s Minister of Finance in the 90s.
“Re: $26bn Diaspora remittances: Where are the dollars?*
The above question was posed in an article in The PUNCH newspaper edition of September 9, 2019, by columnist Henry Boyo.
There is a need to discuss this issue, as it appears that there is massive foreign exchange laundering going on in our banks.
As the architect of the Diaspora remittances in 1996, I am naturally concerned at the abuses disclosed by Boyo.
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.
The question then to me was why income “brought into” India was not taxed in India? On enquiry, I found that India had modified its tax laws to accommodate its citizens living abroad who wanted to send money in foreign exchange to India.
In 1996, I had proposed (and it was accepted by the Federal Executive Council) in a new law, regarding Nigerians repatriating remuneration from abroad, Nigerians repatriating dividends, royalties, fees, commissions from foreign countries receipts by authors, sportsmen/women, musicians, play writers, artist, etc.
Such income repatriated into Nigeria in foreign currency was 100 per cent exempted from tax, provided the foreign currency was repatriated through a domiciliary account with a Nigerian bank!
In 1996, Nigerians abroad repatriated about $4.5bn (about 50 per cent of our gross revenue from oil) and we ensured that these amounts were brought into Nigeria, intact, in foreign exchange.
The receipts helped to stabilise our exchange rate mechanism at N82 to a dollar, throughout my tenure as the Minister of Finance, to the extent that the naira was internally convertible currency.”
We therefore see from above that Diaspora remittances was a targeted government initiative with friendly government laws that went from $0 to $4.5 Billion (half of oil income) in one year with the naira stable at 82=$1.
Per a US-Diaspora columnist, “In 2018, Nigeria’s diaspora remittances rose to U.S.$25 billion, up from $22 billion in 2017.
“These numbers are the highest in sub-Saharan Africa. As Andrew Nevin, the chief economist at PriceWaterCoopers (PwC) Nigeria, explained, this makes *Nigerians abroad the country’s biggest export!*.
Professor Nevin observed that the 2018 figure represented 6.1 per cent of Nigeria’s Gross Domestic Product (GDP) and *translated to 83 per cent of the federal budget*. It is also seven times larger than the net Official Development Assistance received that year, at $3.359 billion.
The meaning of this? “*Nigeria’s biggest export is not oil; it is actually people, because of the remittances coming in*,” he said.
The good professor is right. But even he did not recognise how understated he was: the contributions of Nigerians in the Diaspora are probably twice or triple the numbers that Diaspora remittances can reflect.
Those remittances, by their nature, measure only sums of cash dispatched to Nigeria through direct, traceable links. But by our nature as Africans, the electronic part of us is still in its infancy. We send, but not simply money. We send goods that are not captured under those calculations. We send medications, clothes, toys, food, etc.
And we send money to relatives and friends directly through other relatives and friends. We spend money on relatives and friends through accounts in Nigerian banks.
In the years in which I have lived in the United States, I have met professionals in several fields who tell stories of various pieces of equipment they sent to their former schools and even schools they are not affiliated with, as well as hospitals. In a country in which governments abdicate responsibility for education, some of these organisations even build entire school blocks.