Enhancing Nigeria’s economic resilience: the need for robust surveillance tools in the wake of Trump and other global policy shifts

@Trump @diaspora @remittances @cbn @nigeria

An event that occurred in the USA last week put me in mind of an experience I had sometime in 2015 whilst facilitating a session at the Central Bank of Nigeria (CBN) at Maitama, Abuja. The session was part of an in-house workshop for staff of the Financial Policy and Regulation Department (FPRD), the internal “think-tank” of Nigeria’s apex bank and financial regulator. With me on the beat were Professor Ken Ife, the notable development economist and one former director of the elite department.

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I had suggested to the participants that the department, as part of agility routine, ought to undertake a PESTLE analysis at least once a week, ideally every Monday morning, and to do so as a co-created team activity. What struck me was the prevailing view that it would be too taxing, time-consuming and would interfere inordinately with their otherwise very busy schedules. I was gobsmacked! After making the point that a clear rear-view mirror was practically more valuable to a driver than fuel in the car, and that the bank would be lost without a fit-for-purpose surveillance system – which is what the PESTLE tool represents – I rested my case.

Fast forward to another event that occurred in Florida, USA, a few days ago. The Governor, Ron DeSantis – a devout Trumpian riding the crest of his hero’s anti-immigrant wave - has just proposed measures to curb remittances by illegal immigrants residing in the state. Among these measures is?the requirement for individuals to show identification when transferring money abroad. Under the proposal which takes effect from March 31, 2025, a “Licensee may not initiate a foreign remittance transfer unless the licensee has verified that the sender is not an unauthorised alien,” as defined in the extant law. “We must have the strongest law in the nation on immigration enforcement that will guarantee state and local deportation assistance, end catch and release, eliminate magnets such as remittances, and adopt supporting policies that will protect Floridians,” declared the governor.

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This move, according to experts, could have significant deleterious implications for countries like Nigeria that rely heavily on diaspora remittances for economic development. And it comes just days after the Central Bank of Nigeria (CBN) had made a bullish forecast predicting that diaspora remittances will surge to a record N31.787 trillion once the fourth-quarter 2024 numbers are finalised. Suddenly, a threat emerges on the horizon, which could effectively nullify the bank’s well laid economic recovery plans, including its ambitious goals for economic reform and a $1 billion monthly remittance target.?And it’s got Trump written all over it.

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In 2022, Nigeria received approximately $20.13 billion in diaspora remittances, accounting for about 4% of its Gross Domestic Product (GDP) according to reports. These funds play a crucial role in supporting household consumption, alleviating poverty, and contributing to the nation's foreign exchange reserves. The apex bank’s governor, Olayemi Cardoso, had told reporters 1 February that the bank "undertook critical reforms, including the unification of multiple exchange rate windows to improve FX market efficiency. This led to a 79.4% increase in remittances via International Money Transfer Operators (IMTOs), reaching $4.18 billion in the first three quarters of 2024—up from $2.33 billion in the same period of 2023."

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In December 2024 alone, according to a report by MO Africa Company Limited, “Lagos State’s tourism and entertainment sector achieved a record-breaking revenue of N111.5 billion,” Likewise, the African Travel and Tourism Association, ATTA equally reported a booming festive period. “The festive period, Detty December, attracted about 1.2 million visitors, including international and domestic tourists with hotel bookings alone , contributing N54 billion from 15,000 stays, while short-let apartments earned N21 billion.” ?

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Yet, despite being designed primarily for the benefit of Florida residents, and rightly so, the stricter control on remittances by undocumented migrants in the Florida could adversely affect undocumented Nigerian immigrants in Florida, who may face challenges in providing the necessary documentation to transfer funds. This could lead to a decrease in remittances sent to Nigeria, thereby impacting the livelihoods of families who depend on these funds for essential needs such as food, healthcare, and education. Moreover, the proposed 25% surcharge on companies processing remittances for undocumented immigrants could increase the cost of sending money, potentially discouraging remittances through formal channels. This could drive individuals toward informal channels, which are less secure and harder to regulate, leading to reduced transparency and potential losses in foreign exchange inflows for Nigeria.

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Undoubtedly, a reduction in remittance inflows could have even broader macroeconomic consequences for Nigeria. Remittances are a stable source of foreign exchange and play a role in stabilising the country's balance of payments. A decline in these inflows could therefore exacerbate foreign exchange shortages, potentially leading to further currency depreciation and increased economic instability, among other fiscal and non-fiscal consequences.

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The economic well-being of Nigeria is intricately linked to global financial trends and therefore vulnerable to global shocks and headwinds. As developed nations tighten regulations on remittances in their bid to better control illegal immigration, such as in the Florida case, the fallout from it highlights fragility and vulnerability of countries within an interconnected global space. This is why it is imperative for policymakers in Nigeria to be proactive. Nigeria, as one of the largest recipients of remittances in Africa, faces significant risks if such policies become widespread. To mitigate these risks, the apex bank must deploy robust and fit-for-purpose surveillance tools for monitoring and analysing global trends. Tools such as VUCA (Volatility, Uncertainty, Complexity, and Ambiguity), SWOT (Strengths, Weaknesses, Opportunities, and Threats), and PESTLE (Political, Economic, Social, Technological, Legal, and Environmental analysis) can enable policymakers to better anticipate potential disruptions and implement proactive measures to safeguard economic stability.

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Global economic policies, especially those related to financial flows and migration, have direct and indirect impacts on Nigeria’s financial stability. The reliance on remittances for economic sustenance, investment, and household consumption necessitates an agile and forward-thinking approach. A failure to anticipate and address emerging risks can lead to sudden economic shocks, increased unemployment, and reduced foreign exchange liquidity. By leveraging the scenario modelling tools, policymakers can adopt proactive strategies to protect the economy from such shocks, defend the naira and ensure financial stability, overall. A well-prepared financial system is not just a necessity—it is a strategic imperative for national resilience. Nigeria needs to stay ahead of the agility curve in this and many respects.

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Kachi Okezie, Esq, a lawyer and management consultant, writes from the United Kingdom