By Emeka Okoroanyanwu
Nigerians living abroad officially brought home $22 billion in 2018, amounting to about 83 per cent of that year’s Federal government budget and 6.1 per cent total of Nigeria’s Gross Domestic Product (GDP).
Official records indicate that there are 1.24 million migrants from Nigeria in the diaspora. This figure is likely to be higher in 2019 with the recent trend in migration from the country.
Almost half of Nigerian adults have indicated their willingness to leave the country in the next five years, according to a 2018 survey conducted by the Pew Research Centre.
Nigeria accounts for over a third of migrant remittance flows to Sub-Saharan Africa. PwC estimated that these flows amounted to US$23.63 billion in 2017 and US$22 billion in 2018.
Nigeria’s remittance inflow was also 7.4 times larger than the net official development assistance (foreign aid) received in 2017 of US$3.4 billion.
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PwC estimates that migrant remittances to Nigeria could grow to US$25.5bn, US$29.8bn and US$34.8bn in 2019, 2021 and 2023 respectively. Over a 15-year period, PwC expects total remittance flows to Nigeria to grow by almost double in size from US$18.37 billion in 2009 to US$34.89 billion in 2023.
The growth in remittances is subject to global economic forces, which could spur or hinder growth of remittance flows.
Other factors that will drive remittance flows include growth in emigration rate, economic conditions of the resident countries and the economic fundamentals in the Nigerian economy. The World Bank forecasts global growth to slow to 2.6% in 2019.
According to the IMF, remittances represent household income from foreign economies arising mainly from the temporary or permanent movement of people to those economies. Remittances include cash and non-cash items that flow through formal channels such as electronic wire, or through informal channels, such as money or goods carried across borders. The importance of remittances is in the role they play in economies.
They help poorer recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses, service debt and essentially, drive economic growth. Empirical studies show that the primary benefits of remittances to recipient households is the improvement in their general welfare. According to analysts, 70% of remittances are used for consumption purposes, while 30% of remittance funds go to investment related uses.
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The World Bank estimated that global remittances grew by 10% to $689 billion in 2017, $633 billion in 2018, with developing countries receiving 77 per cent or $528 billion of the total inflows.
India, China, Mexico, the Philippines and Egypt are among the largest remittance recipients globally, collectively accounting for approximately 36% of total inflows. The official recorded remittances are much lower than the actual remittances that take place through official and unofficial channels.
Remittances through informal channels could add at least 50% to the globally recorded flows, according to the World Bank. The SSA region received a small share of the global remittances in 2018, with Nigeria accounting for over a third of regional inflows. Despite representing a small percentage of global flows, official remittances to Sub-Saharan Africa grew by 10% to $46 billion in 2018. The World Bank also projects remittances to the region will grow by 4.2% in 2019, due to a moderation in global growth.
According to the International Monetary Fund (IMF), remittances sent to SSA through informal channels, at 45 to 65% of formal flows, are significantly higher than in other
Overall, remittance flows are anticipated to keep expanding as a result of two factors: projected strong regional economic growth in 2019 and large intra-regional migration flows from the SSA region.
