Nigeria’s Surging Diaspora Remittances
By Abdulrahman Abdulraheem
As a so-called third world country with millions of its nationals in different parts of the world working to earn a decent living, Nigeria is one of those nations whose mass population relies heavily on ‘manna’ from abroad to feed and pay bills. These are professionals in different fields whose expertise the country is missing in medicine, academia, journalism, sports, engineering, architecture etc but whose monies the country feeds fat on as a form of compensation.
These nationals do not only send money to their parents, spouses, siblings and friends back home who they care about, they also look back and invest in the country in terms of profit-oriented businesses and philanthropic gestures. So, the huge sums of money, often in hard currencies, that these men and women send across to Nigeria on a regular basis have contributed in no small measure to reflating the economy. These diaspora remittances constitute the most underrated source of foreign exchange earner for the country.
Remittances are household income from foreign economies arising mainly from the temporary or permanent movement of people to those economies. Remittances include cash and noncash items that flow through formal channels such as electronic wire, or through informal channels, such as money or goods carried across borders.
According to the International Monetary Fund (IMF), remittances help poorer recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses, service debt and essentially, drive economic growth.
According to the World Bank, the Nigerian Diaspora of about 1.7 million population remitted $65.34bn in three years to boost economic activities in the country. According to the Bank, in 2018, the Nigerian Diaspora remittance was $24.31bn; in 2019, it dropped to $23.81bn; and in 2020, it fell to $17.21bn.
These huge sums of money that support individuals, households and small businesses are the reasons we should consider renaming the ‘japa’ syndrome ‘Brain Gain’ instead of ‘Brain Drain.’ The latest enabler of this transformation from ‘Brain Drain’ to ‘Brain Gain’ is the Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso.
There are possibilities, however, that the Nigerian Diaspora population is larger than what has been officially captured. The Chairman of the Nigerians in Diaspora Commission (NIDCOM), Mrs. Abike Dabiri-Erewa, had in 2017 said there were about 15 million Nigerians in various parts of the world.
There is also another possibility that remittances to Nigeria are much higher than have been officially captured. This is because many Nigerians abroad explore unofficial ways of sending home money in order to maximise unofficial exchange rates.
Meanwhile, Nigeria recorded $282.61 million as total direct foreign exchange (FX) remittances in the first quarter (Q1) of 2024.
The figure represents a decrease of $18.96 million or 6.28 percent compared to the $301.57 million remittances recorded in Q1 2023.
In Q1 this year, the remittances stood at $138.56 million in January, however, it dropped to $39.14 million in February, before rising to $104.90 million in March.
Governor Cardoso has therefore introduced a couple of reforms to enhance diaspora remittances and make sure Nigeria does not miss out of a dime that should come into the economy.
The latest remittance inflows reached $553 million in July 2024, a 130 per cent increase from the corresponding period in 2023.
This figure represents the highest monthly total inflows on record and reflects ongoing efforts by the CBN to enhance liquidity in Nigeria’s foreign exchange market.
Cardoso’s Cards
The growth in remittance receipts is attributable to policy measures introduced by the CBN to enhance liquidity in Nigeria’s foreign exchange market. These measures include granting licences to new International Money Transfer Operators (IMTOs), implementing a willing buyer willing seller model, and enabling timely access to naira liquidity for IMTOs.
Noting that diaspora remittances are a crucial source of foreign exchange for Nigeria, supplementing both foreign direct investment and portfolio investments, the CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.
“The increase in remittances is a strong testament to the success of the CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth,” CBN spokesperson, Hakama Sidi-Ali, said recently.
The National Bureau of Statistics (NBS) revealed that Nigeria’s year on year headline inflation rate slowed in July 2024 for the first time in 19 months which he said is a clear indication that the CBN’s monetary policy tightening measures are delivering results.
“CBN anticipates that these measures will contribute to achieving its broader objective of maintaining stability in the foreign exchange market. The Bank will continue to monitor market conditions and adjust policies as necessary to enable greater remittance flows into Nigeria,” Hakama added.
Last Line
While a lot of Nigerians seem to look at what the country is losing to the ‘japa’ syndrome in terms of skilled manpower and condemn it in totality, they seem to be missing the bigger picture in their diagnosis of the country’s economic situation. A deeper reflection of the cycle of our youngsters’ movement abroad will reveal that it is more of a blessing than a curse or a blessing in disguise. We can’t on one hand complain about unemployment in the country and limited opportunities for the youths, and on the other hand lament the fact that these youths are helping themselves to go abroad and sending huge sums of money back home to take care of their loved ones and also to invest in critical areas of the economy. It is a known fact that most of the private schools, hospitals, hotels, pharmacies, relaxation spots etc in Nigeria’s urban centres are owned our ‘diasporans.’ Can we quantify this value addition to the economy in terms of job and wealth creation as well as tax payment to the authorities?
This is what the CBN needs to do (And Governor Cardoso is not taking this task lightly): Continue to expand the space to accommodate more remittances from abroad and make it easier for Nigerians living abroad to send these monies and for the recipients back home to access the monies easily.
While government as a whole has a duty to make the country livable for everyone and ensure that Nigerians of all ages are able to prosper within the country, but this doesn’t mean all Americans live and work in America or all French citizens live and prosper in France. Immigration and emigration are part and parcel of the global order and what the Central Bank of each country needs to do is to ensure the country benefits maximally from the legitimate earnings of their citizens that are excelling abroad.
Abdulrahman Abdulraheem is the author of “eNaira Revolution: A Peep into Nigeria’s Cashless Future”
