Decline in Remittances Triggers Reflection on Economic Strategies
Earlier in 2021, the World Bank disclosed that Nigeria’s diaspora remittances fell sharply to $17 billion in 2020, a significant decline from $23 billion in 2019. Analysts attribute this downturn to the rising adoption of blockchain-based remittance platforms. In response, the Federal Government has initiated measures aimed at stabilizing the naira and boosting remittance inflows from abroad.
Rethinking Economic Empowerment
This article examines why the Federal Government has emphasized enhancing remittances from the diaspora instead of investing in local businesses that could generate foreign exchange revenue. The focus on diaspora contributions, while beneficial, has overshadowed the critical need for national resilience and innovation in domestic economic activities.
Understanding the Diaspora and Remittances
The term “diaspora” originates from the ancient Greek word “diaspeiro,” meaning “to sow.” It broadly refers to a scattered population with origins in diverse geographical areas. As of 2020, the global count of international migrants reached approximately 281 million, constituting 3.6% of the world’s population. Notably, 1.3 million Nigerians left the country in 2017 in search of better opportunities.
Remittance Trends and Economic Impact
The International Monetary Fund defines remittances as financial transfers from expatriates that can significantly impact their home countries’ economies. In 2018, Nigerian expatriates sent approximately $25 billion back home, making up 6.1% of that year’s GDP. However, the figure dropped to $23.81 billion in 2019 and further declined to $17.21 billion in 2020, which represented 4% of Nigeria’s GDP.
Global Context of Remittance Inflows
During the period from 2018 to 2020, India’s estimated diaspora of 17.9 million contributed $245.27 billion in remittances, while Nigeria’s 15 million migrants sent around $64 billion. The World Bank confirmed that in 2020, Nigeria experienced a staggering 28% drop in remittance inflows, contrasting with resilience shown by other countries in the sub-Saharan region, which reported a 2.3% increase in remittances excluding Nigeria.
The Challenges of High Remittance Costs
Despite the significance of remittances, the cost of transferring funds remains a challenge. The average fee for sending $200 to low- and middle-income countries was high at 6.58%, far exceeding the Sustainable Development Goal (SDG) target of 3%. Sub-Saharan Africa faced the steepest average costs, recorded at approximately 8.2%.
Migration Motivations Among Nigerians
A recent World Bank survey highlighted that nearly 50% of Nigeria’s population expressed a willingness to migrate if given the chance. The primary motivations for seeking opportunities abroad include financial improvement, the pursuit of quality jobs, and escaping economic hardship and poverty. Notably, many view moving abroad as a pathway to better education, healthcare, and overall quality of life.
Historical Context of Migration and Diaspora Dynamics
The issue of remittances in Nigeria is not new; it begins as early as the 1960s when Nigerians first sought to mitigate hardships at home. The notable devaluation of the naira in the late 1980s led many expatriates to realize the advantages of sending dollars home. Over the years, the motivations for migration have evolved, from pursuing education to seeking escape from challenging governance and economic conditions.
