Nigeria recorded $11.12 billion in personal transfers in the first half of 2026, but only $2.85 billion came through formal international money transfer operators.
This raises questions about how much diaspora money flows through regulated channels and what the figures reveal about the country’s foreign exchange market.
Data from the Central Bank of Nigeria’s balance of payments, analysed by Business Metrics, showed that personal transfers rose from $5.30 billion in the first quarter to $5.82 billion in the second quarter, bringing the six-month total to $11.12 billion.
Separately, CBN data showed that remittance inflows through International Money Transfer Operators (IMTOs) reached $2.85 billion in the first half of the year, up 38.16 per cent from $2.07 billion in the corresponding period of 2025.
While the two figures measure different categories of transfers, their scale, however, highlights the important question of how effectively is Nigeria capturing diaspora funds through formal channels, and how much room remains to improve the recording and processing of these transactions?
Finance Ministry Flags Informal Remittance Flows
The question has gained further significance following the Federal Ministry of Finance’s recent response to reports about a $12.4 billion negative residual in Nigeria’s balance of payments for the first half of 2026.
In a statement addressing the figure, the ministry said the residual, classified as “net errors and omissions”, did not mean that money had gone missing. Rather, it reflected discrepancies between data sources used to record transactions across the economy.
The ministry identified several possible contributors to the residual, including diaspora remittances, informal cross-border trade, delayed export payments and provisional data.
On remittances, it said an estimated $10 billion annually moves through informal channels or remains abroad without reaching Nigerian banks or foreign reserves.
The statement underscores the difficulty of establishing how much foreign currency associated with economic activity involving Nigerians and overseas residents ultimately enters the country’s formal financial system.
However, the ministry’s estimate should not be interpreted as an explanation for the difference between the $11.12 billion in personal transfers and the $2.85 billion recorded through IMTOs. The figures cover different measures, while the balance-of-payments residual reflects discrepancies across multiple categories of external transactions.
CBN Seeks to Make Formal Channels More Attractive
The Central Bank has been pursuing reforms aimed at encouraging Nigerians abroad to send money through official channels, with Governor Olayemi Cardoso setting a target of $1 billion in monthly remittance inflows.
Speaking at the BusinessDay CEO Forum in July, Cardoso said the bank had made progress towards its remittance objectives.
“We gave ourselves a goal that we would double the remittance inflows between the time we started and the end of the year, and we did exactly that,” he said.
The CBN has attributed the improvement in formal inflows to measures intended to make regulated channels more competitive, transparent and accessible.
These include changes to the foreign exchange framework, revisions to the rules governing IMTOs, the expansion of licensed operators and the introduction of the Non-Resident Bank Verification Number, which allows eligible Nigerians abroad to complete verification remotely.
In March 2026, the apex bank also directed IMTOs operating in Nigeria to open and maintain naira settlement accounts with authorised dealer banks. The arrangement, which took effect under the new framework from May 1, requires remittance transactions to pass through designated accounts to strengthen monitoring and transparency.
The reforms seek to reduce the incentives for using informal channels, particularly where senders or recipients believe they can obtain more favourable exchange rates or avoid the costs and delays associated with formal transfers.
Inflows Does Not Tell the Whole Story
The rise in formal remittances is significant. Analysts at Cowry Asset Management said first-half inflows through IMTOs increased by $788.5 million year-on-year, reversing the 11.78 per cent decline recorded in the first half of 2025.
However, the firm cautioned that growth in recorded inflows does not necessarily mean that total diaspora transfers have increased by the same amount.
Part of the improvement may reflect money previously transferred through informal arrangements moving into regulated systems. Such a shift would improve the visibility and traceability of transactions, even if the total amount sent by Nigerians abroad had not increased proportionately.
This distinction matters because the economic benefits of remittances depend on more than the amount recorded in official statistics. The route through which the money enters the country, how it is converted and how it is subsequently used can all influence its contribution to foreign exchange availability and domestic economic activity.
Cowry Asset Management identified foreign exchange stability, lower transfer costs and greater confidence in official payment systems as important conditions for sustaining the growth in formal remittances.
For the CBN, the challenge is therefore twofold: maintaining the momentum in recorded inflows while making formal channels sufficiently attractive to capture a greater share of existing transfers.
The Next Test for Nigeria’s Remittance Strategy
The first-half figures show that formal remittance inflows are recovering, but they also highlight the need to distinguish between the amount of money recorded through specific transfer operators and broader measures of personal transfers.
The $11.12 billion personal-transfer figure points to the importance of cross-border transfers to Nigeria’s external receipts, while the $2.85 billion recorded through IMTOs provides a narrower measure of activity passing through formal remittance channels.
Neither figure, on its own, establishes how much additional foreign currency has entered the economy as a result of recent reforms.
The more revealing test will be whether the CBN can sustain growth in formal inflows, reduce the cost and friction of sending money through regulated providers, and improve confidence in the official market.
As the bank pursues its target of $1 billion in monthly formal remittances, analysts believe attention should shifted from just how much money Nigerians abroad send home, to how effectively Nigeria’s financial system can attract, record and retain the economic benefits of those transfers.
