Story by Kayode Tokede
A report by PwC has disclosed that foreign remittances into Nigeria could grow to $25.57 billion, $29.8 billion and $34.8 billion in 2019, 2021 and 2023 respectively.
The report tagged, “Strength from Abroad: The Economic Power of Nigeria’s diaspora”, by PWC, noted that migrant remittances were 77.2per cent of the federal government’s budget in 2018 and more than 10 times the foreign direct investment (FDI) flows in the same period.
Over a 15-year period, PwC said it expected total remittance flows to Nigeria to grow by almost double in size from $18.37 billion in 2009 to $34.89 billion in 2023.
Partner and Chief Economist, Dr.Andrew Nevin, explained, “The report is an analysis which shows the critical importance of the diaspora to Nigeria’s economy. The recently established Nigerians in Diaspora Commission (NiDCOM) led by Abike Dabiri-Erewa, indicates that the Federal Government recognizes the strategic importance of the Nigerian diaspora. The key next steps for the newly established Commission is to formulate and execute a strategy to maximize the benefits of Nigeria’s diaspora.
“In addition, we’re very keen to see State Governments start to engage the diaspora. The primary benefits of remittances to recipient households is the improvement in their general welfare, and studies show that 70per cent of remittances are used for consumption purposes, while 30per cent of remittance funds go to investment-related uses. So it is important that Nigeria has a diaspora strategy both at the national and state level.
According to the report, Nigeria accounts for over a third of migrant remittance flows to Sub-Saharan Africa. Egypt and Nigeria account for the largest inflows of remittances into Africa in 2018. In 2017, Nigeria led the Continent in terms of remittance receipts but dropped to second place behind Egypt in 2018.
It said, “For four consecutive years, official remittances have exceeded Nigeria’s oil revenues. Since many transactions are unrecorded or take place through informal channels, the actual amount of remittance flows into the country is arguably higher.”
According to the report, Since many transactions are unrecorded or take place through informal channels, the actual amount of remittance flows into the country is arguably higher. In 2018, migrant remittances to Nigeria equaled $25 billion, representing 6.1per cent of Gross Domestic Product (GDP). This also represents 14per cent year-on-year growth from the $22 billion receipt in 2017.
“The 2018 figure translates to 83per cent of the Federal Government budget in 2018 and 11 times the FDI flows in the same period. Nigeria’s remittance inflows was also seven times larger than the net official development assistance (foreign aid) received in 2017 ($3.4 billion.).”
The report stated that remittances from the United States amounted to $6.19 billion in 2017 and accounted for nine per cent of the total remittance outflows from the country in the same period.
“The United States accounts for 22.6per cent of the total emigrants from Nigeria in the diaspora. Remittance per capita from the Nigerian diaspora in the U.S. to Nigeria is $22,107 per emigrant.”
PwC, therefore, recommended the need to create platforms that increase the accessibility of crucial information for Nigerians in the diaspora; encourage and create pooled investment vehicles, and early-stage businesses with smaller financing needs, presents a great opportunity for those in the diaspora to invest through angel networks.
“Several countries across the globe, including Nigeria, have developed plans towards attracting investment from their diaspora community for national development. Essentially, the extent to which the diaspora contributes to the developmental affairs of a country will be determined largely by trust.
“Sub-national governments (states) across most of these countries are also tapping into the immense opportunities in the diaspora space.
“In summary, what is required is a coherent policy framework to harness remittances into generating capital for productive investments for the growth and development of small and micro-enterprises, which will in turn, create employment. In addition, remittances can be deployed toward philanthropic activities which can serve as solutions for specific deficiencies in the local infrastructure such as schools, hospitals and roads.”