Nigerians in Diaspora remit $65.34bn in three years
In 2020, India had a Diaspora population of 17.9 million and received $245.27bn in remittances in the three years under review.
While India’s remittance inflow overshadowed Nigeria’s, its remittance per Diaspora population was $13,702.30.
Bangladesh had a Diaspora population of 7.4 million in 2020. It had a total remittance of $55.68bn from 2018 to 2020. This puts the country’s remittance per Diaspora population at $7,524.29.
Diaspora remittance made up a larger share of Bangladesh’s GDP than any of the other two nations. Remittances as a share of GDP in 2020 was four per cent in Nigeria, 3.1 per cent for India, and 6.6 per cent for Bangladesh.
There are possibilities, however, that the Nigerian Diaspora population is large than what has been officially captured.
The Senior Special Assistant to the President on Foreign Affairs and the Diaspora, Mrs Abike Dabiri-Erewa, had in 2017 said there were about 15 million Nigerians in various parts of the world.
According to the International Monetary Fund, 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.
The IMF stated that 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.
The Federal Government signed the Nigerians in Diaspora Commission Establishment Bill into law in July 2017 after recognising the strategic importance of the Nigerian Diaspora.
The Law established the Nigerians in Diaspora Commission, which was set up to engage and utilise the human, capital and material resources of this demography in the socioeconomic, cultural and political development of Nigeria.
Abike Dabiri-Erewa was appointed as the first chairman and chief executive officer of the Commission. In 2019, the Federal Government went a step further by recognising July 25 of every year as National Diaspora day.
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 maximize unofficial exchange rates.
To increase official channels of Diaspora remittances, the Central Bank had recently rolled out a number of measures in the face of dwindling foreign exchange from other sources.
In March, the apex bank introduced the ‘Naira-4-Dollar’ policy as a means to increase the country’s foreign exchange inflow.
The CBN introduced a rebate of N5 for every $1 of fund remitted to Nigeria through International Money Transfer Organisations, saying increased remittances ‘can only be accomplished if the remittance infrastructure improves and if the right policies are put in place’.
The CBN’s governor, Godwin Emefiele, at the time had said, “Furthermore, in an effort to reduce the cost burden of remitting funds to Nigeria by working Nigerians in the Diaspora, the Central Bank of Nigeria has introduced a rebate of N5 for every $1 of fund remitted to Nigeria, through IMTOs licensed by the Central Bank.
“This rebate will be provided to the bank accounts of beneficiaries, following receipt of remittance inflows.
“We believe this new measure will help to make the process of sending remittance through formal bank channels cheaper and more convenient for Nigerians in the Diaspora.”
PwC had said the policy may increase the country’s foreign remittances to $34.89bn by 2023.
Only twice has yearly total remittance inflow of Nigeria has only fallen below $20bn since 2011 – in 2016 and in 2020. In 2016, Nigeria recorded $19.7bn as official remittance.
In 2017, the Debt Management Office issued a $300m Diaspora Bond and the proceeds were used to finance part of the deficit in the 2017 Appropriation Act.
The $300m was issued as part of the New External Borrowing of N1.07tn specified in the 2017 Appropriation Act for part financing of the budget deficit.
The Chief Executive Officer, SD&D Capital Investment, Gbolade Idakolo, said that insecurity was a major reason why remittance dropped in 2020.
He said, “The number one cause is the insecurity that pervades the land. The remittances for investment have been halted in the areas of mining, agriculture and manufacturing.
“Also, there are the unfavourable policies of the CBN with regards to Diaspora remittances.
“These policies make some people in the Diaspora lose confidence in Nigeria.
“However, the CBN is now trying to create a soft landing for remittances to encourage inflow. The policies had negatively affected Diaspora remittances because those in Diaspora were not sure repatriation of their funds when they had invested.
“Another issue is the investment climate in the country and the government is not reaching out enough through our embassies and representatives in various countries to be able to ensure that we are receptive to foreign investments.”
Idakolo said that Nigeria has to learn from countries like the Philippines and Kenya who package their citizens under a well-regulated system to countries where their services would be needed, where they were sure that their citizens would be able to get good jobs and boost Diaspora remittances.
He attributed this as the reason why the Philippines and India are ahead of Nigeria in Diaspora remittance.
Idakolo added, “The major implication is that the foreign reserve will continue to deplete and it will not be able to fund a large amount of importation for Nigeria.
“The second one is that most of these investments that would have boosted the economy are nowhere to be found. Low investments lead to increased unemployment and generally hardship in the country.”
A former deputy governor at the CBN, Obadiah Malafia, said the COVID-19 pandemic was the reason remittances fell in 2020.
He said, “COVID-19 is one of the reasons because it led to a generalised lockdown in advanced industrial countries where Nigerians in Diaspora dwell. Also, in relation to that is the rising unemployment and closure of business. This affected remittance in the previous year one way or the other.
“Thirdly is the rising cost of transfers, when people want to wire their money, the cost is usually high which discourages remittances.
“The Diaspora remittances play a very important role in the economy. When they are low, the amount of foreign exchange in circulation becomes low and people start chasing dollars which causes its value to skyrocket against the naira.
“My advice to the government is to make the country better, strengthen the financial sector; create a safe corridor for entrance of remittances and encourage Diaspora bonds as an avenue where Nigerians in other countries can invest.”
He also urged the government to maximise and optimise whatever come in from remittances to develop the country.