Photo Credit: The Cable

The Central Bank of Nigeria (CBN) has identified the diversion of diaspora remittances to the parallel market as a significant factor in the sharp depreciation of the naira against the dollar.

During a lecture titled ‘Diaspora Remittances and Nigeria’s Economic Development’ at the National Institute for Security Studies in Abuja, Folashodun Shonubi, the acting governor of the CBN, revealed that substantial remittances were arriving in Nigeria but were not being officially documented. Many of these remittances, primarily in dollars, were finding their way into the unregulated parallel market.

Shonubi stressed that the unofficial market was susceptible to criminal activities, explaining, “We investigate bankers, not just bankers, anybody who has committed an offense, the first thing they want to do is to run to the black markets, change it to the dollars because it is less money to carry around. Some of the funding in the black markets are actually from diaspora remittances.”

He emphasized the need to manage illicit remittances and channel them into approved channels to stabilize the foreign exchange market and bolster the economy.

Shonubi pointed out that diaspora remittances play a crucial role in many countries’ economies and urged understanding the dynamics to prevent currency instability and make informed policy decisions.

The CBN’s assessment comes as the naira hit an all-time low of N950/$ at the parallel market, while appreciating slightly in the investors and exporters (I&E) window.

Shonubi’s lecture underscores the importance of proper remittance channels and regulations to prevent economic disruption and ensure a stable currency value.

Source: The Cable