The recent quest by the Central Bank of Nigeria (CBN) to enhance the participation of Nigerians in the diaspora, in the domestic economy especially through increased remittances is worthy of commendation. This is the way to go, given the current perennial supply shortage of foreign exchange in the local market relative to the demand. This shortage has been a recurring factor which has had a serious impact on the stabilisation of the exchange rate and the management of the persistent volatility in the market. Indeed, it is good to assist Nigerians in the diaspora to send money home. Still, other factors exist which, it is hoped, the CBN has taken cognisance of while being excited in the mounting of this policy.
This proposed solution to the shortage of foreign exchange in the country which was jointly crafted by the CBN and the Nigeria Inter-Bank Settlement System (NIBSS) and tagged the ‘Non-Resident Bank Verification Number (NRBVN)’ appears plausible. Conceptually, the positive impact of the diaspora on the survival of the economy cannot be overemphasised. The prevailing challenges of the global economy especially the instability in the global crude oil make the inflow of remittances a sine qua non for the economy’s survival, especially in the boosting of foreign exchange supply.
Of a truth, the stabilisation of the exchange rate has a tremendous impact on the manufacturing sector, among others, through the effect of easing the availability of foreign exchange for imported inputs and the pass-through effects it has on the cost-of-living index. The need to engage the diaspora to maximise the potential of the economy cannot be overemphasised. There is a need for further steps by the authorities to enhance the inflow of remittances to the country. Hence the statement by the CBN that “The NRBVN is part of a broader framework that includes the Non-Resident Ordinary Account (NROA) and Non-Resident Nigerian Investment Account (NRNIA)” is quite refreshing. As implied in the CBN position, these platforms will enable access to savings, mortgages, insurance, pensions, and investment opportunities in Nigeria’s capital markets,”
This is a good step in the right direction. However, the CBN should recollect the popular saying that “if wishes were horses, even beggars will ride”. There have been numerous policy frameworks on the enhancement of foreign exchange inflows into the country before now, which have not really materialised as expected.
Recently, under the leadership of Godwin Emefiele, the CBN enunciated the Remittances and Trade 200 (RT200) foreign exchange programme designed to boost foreign exchange reserves from non-oil exports to $200 billion over three to five years. This has faced challenges in its implementation and impact. For instance, the RT200 programme, despite good intentions, created a separate foreign exchange window with a different (subsidised) exchange rate, had governance issues with potential for unintended consequences, and exacerbated existing foreign exchange issues.
The RT200 programme, though it achieved some significant progress with $600 million in inflows in the first half of 2022, the overall performance was mixed in nature. This new NRBVN should not be made to suffer the same fate, of creating new challenges in the management of the foreign exchange market. Nigeria is not lacking in the enunciation of new policy initiatives but the key challenge is always that of implementation.
The challenge that may bedevil the programme is the instability of the economic fortunes of Nigerians in the diaspora especially with the growing nationalist sentiments across the Americas and Europe in recent times with threats to job losses by immigrants in these regions of the world and the consequent implications on their remittance flows to their home countries.
Next is the general perception that the home country is not working as expected and thus the country’s risk perception is growing such that there is inertia and reluctance to send money home, especially through the formal channels. News of corrupt practices in the home country has had the effect of lowering remittance inflows. Hence, the authorities, especially at the federal level should address these negative perceptions which not only affect citizens abroad but also foreign investors trying to seek for investment opportunities in Nigeria.
Overall, Nigeria needs increased inflows of remittances. The idea of the NRBVN is considered to be a good one. However, the likely challenges need to be properly articulated and addressed so that the benefits expected to accrue to the economy with the implementation of the programme will materialise in the overall interest of the ordinary Nigerian.
