Disintermediation of Remittance into Nigeria By Cryptocurrency

Disintermediation of Remittance into Nigeria By Cryptocurrency

You have seen the left chart on how remittance crashed for Nigeria in 2020. That chart is not necessarily accurate: Nigerian diasporas were wiring money home, despite Covid-19 in 2020. But something happened – the official channels were dinstermediated by cryptocurrency. A core reason was the former Central Bank of Nigeria (CBN) policy where they paid at the official exchange rate of US dollars, instead of something closer to the black market rate. So many used Bitcoin to move money to ensure they get the black market rates in the nation. The apex bank has since fixed that paralysis through the new dollar-for-dollar policy (people are paid in USD in Nigeria); they also add a free Naira on top under the Dollar4Naira initiative.

So, looking at the left chart without checking the right one, any policymaker would be confused. In short, I will even add Peer-to-Peer remittance which makes it unnecessary to have the funds move across the Atlantic. Yes, you have Naira in Lagos and someone in New York needs Naira in Lagos but he has US dollars. You credit his Naira account in Lagos while he credits a vendor in China in USD for you (usually the case).

Magically, remittance has happened but no government will capture it in its books. This has become very common, partly because Western Union and other IMTOs have put unreasonable monthly limits on money transfers.

So, World Bank cannot rely on absolute transfers via official channels; they may need to run surveys to gauge how many diasporas are using other channels to get the big picture of remittance.

The way we calculate remittance has to change, at least for Nigeria!



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3 thoughts on “Disintermediation of Remittance into Nigeria By Cryptocurrency

  1. Every economic analysis needs a separate sheet to run the ‘Nigerian Model’, because all theorised models will always fall short here.

    It’s not just on remittances, same applies to GDP calculation, same also goes for measuring extreme poverty. Benchmarking with $2 per day may not work for some people in the village, who can source and eat food whose its true worth in the city could reach $6, but for being in the village without fanciful amenities, they are classed as extreme poor!

    To measure anything near accurately here requires serious work, any textbook approach will miss the mark.

    There’s a reason why people keep surviving, even when they are categorised as extreme poor, you need to put your eye on the ground to figure it out…

  2. This is very true. There is need for a holistic research on the coping mechanisms of Nigerians in rural areas and adequate analysis done. Until then, most models being used will be a joke.


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