By Chinwendu Obienyi
For centuries, there have
been heated debates over the sources of economic growth in developing economies
and why some countries reflect strong economic growth compared to others.
The hypotheses have often centred around crude oil, agriculture,
revenues, private capital, bubbling stock market, stable security, low
unemployment rate, high standard of living amongst others. But in recent times,
one factor that has been added to this list is diaspora remittances as it is
one of the major international financial resources, which sometimes exceed the
flows of foreign direct investment (FDI).
Remittances promote economic growth by increasing household income
and increasing income creates the opportunity to boost consumer spending,
accumulation of assets, promotion of self-employment, and investment in small
Data from the World Bank in 2014 indicates that global remittances
stood at $430 billion dollar in 2011 and was 0.31 per cent of global GDP in
2009. The impact of remittances on any economy is more profound in developing
countries because they receive $307.1 billion of the total N416 billion inward
remittances, amounting to about 74 percent.
Remittances also account for about 27 percent of the GDP of
developing countries. According to the World Bank, remittances flows to the
developing world have reached $414 billion in 2013 (up 6.3 per cent over 2012),
and are now, behind foreign direct investment, the second largest source of
external financial flows to developing countries.
Daily Sun investigations reveal that the enormous upward movement
in remittances payments may be attributed largely to two factors, namely;
immigration between developing and developed countries which increased
dramatically in the past 20 years and declined in transaction costs as
technological improvements have allowed for faster, lower cost mechanisms for
the international transfer of payments between individuals.
This means that it is different from other external capital
inflows like foreign direct investment, foreign loans and aids due to its
stable nature. Little wonder why the Central Bank of Nigeria (CBN) unveiled a
new policy in 2020 that granted unfettered access to forex from the diaspora
and other money transfer remittances like Western Union and MoneyGram.
The bank also clarified transactions that are eligible under the
policy in line with global best practices. The policy allows beneficiaries of
diaspora remittances through International Money Transfer Operators (IMTOs) to
henceforth receive such inflows in the original foreign currency through
designated bank of their choice. It explained that the new regulation was part
of efforts to liberalise, simplify and improve receipt and administration of
diaspora remittances into Nigeria.
Under the new policy, recipients of remittances may have the
option of receiving such funds in foreign currency cash (US Dollars) or into
their ordinary domiciliary account.
“These changes are necessary to deepen the foreign exchange
market, provide more liquidity and create more transparency in the
administration of Diaspora remittances into Nigeria,” the apex bank stated.
It explained that the changes would help finance a future stream
of investment opportunities for Nigerians in the Diaspora, while also
guaranteeing that the recipients of remittances would receive a market-
reflective exchange rate for their inflows.
Backed by these words, several commercial banks swung into action
to tap into this virgin zone by introducing a variety of offers that yield fruits
as more remittances started coming in.
However, the CBN in March 2021, in a bid to encourage more
inflows, introduced a new incentive tagged “Naira 4 Dollar Scheme”. In a
circular signed by Saleh Jibrin, CBN ‘s Director, Trade and Exchange
Department, said, the scheme would allow all recipients of diaspora remittances
to be paid N5 for everyone dollar received.
This explains why First Bank of Nigeria Limited chose to expand
diaspora remittances inflow into the country by increasing its network of
International Money Transfer Operators (IMTOs) targeted at easing accessibility
of its customers to receive money from close to 100 countries across the world
in a safe and secured manner.
Before then, it was on record that FirstBank has maintained a long-standing
partnership with Western Union, MoneyGram, Ria, Transfast, and WorldRemit. The Bank
is also in partnership with other IMTOs including Wari, Smallworld, Sendwave,
Flutherwave, Funtech, Thunes and Venture Garden Group to promote remittance
inflows into the country, thus putting Nigerians and residents at an advantage
in receiving money from their families, friends and loved ones across the
bank’s 750 branches especially in this Yuletide season.
For potential customers without an existing domiciliary account,
they can have their dollar account automatically created for their remittances
and can also receive inflow directly into their account through Western
Union. In addition, FirstBank has launched its wholly owned remittance
platform named First Global Transfer product to promote the international
transfer of funds across its subsidiaries in sub-Saharan Africa. These
subsidiaries include FBNBank DRC, FBNBank Ghana, FBNBank Gambia, FBNBank
Guinea, FBNBank Sierra-Leone, and FBNBank Senegal.
Reiterating the bank’s resolve in promoting diaspora remittances,
regardless of where one is across the globe, the Deputy Managing Director, Mr
Gbenga Shobo said, “At First Bank, expanding our network of International Money
Transfer Operators is in recognition of the significant roles diaspora
remittances play in driving economic growth such as helping recipients meet
basic needs, fund cash and non-cash investments, finance education, foster new
businesses and debt servicing.
We are excited about these partnerships, as it is essential to
ensure our customers are at an advantage to receive money from their loved ones
and business associates, anywhere they are across the world.”
Having been at the forefront of pioneering international funds
transfer and remittances over 25 years ago, it is safe to say the bank’s wealth
of experience and operation in over 750 locations nationwide gives it the edge
in the market.
With its total principal standing at N100 billion and over one
million customers to service in 2020, FirstBank is providing prospective
investors wishing to explore the vast business opportunities that are available
in Nigeria, an internationally competitive world-class brand, a credible financial
partner, thus promoting economic growth and development.
Culled from The