In 2017, Nigerians in the Diaspora’s remittances was $22 billion. It jumped to $25 billion last year; that is, 6.1 per cent of the Gross Domestic Product (GDP) and 83 per cent of the Federal Government’s budget. Experts say that tapping into this enormous Diaspora remittance market could be the wedge for an economy in search of inclusive and sustainable recovery. Assistant Editor CHIKODI OKEREOCHA reports
Partner and Chief Economist at the Pricewaterhouse Coopers (PwC) Nigeria Dr. Andrew S. Nevin hit the bull’s eye when he said: “Nigeria’s biggest export is not oil; it is actually people, because of the remittances coming in.”
To Nevin and, indeed, other experts, Nigerians living abroad are its biggest export, considering their huge remittances that hold enormous opportunity and growth.
The PwC boss said last year that Nigerians in Diaspora remitted $25 billion, representing 6.1 per cent of the Gross Domestic Product (GDP).
According to him, this figure translates to 83 per cent of the federal budget and 11 times the Foreign Direct Investment (FDI) flows in the same period. It was also seven times larger than the net official development assistance (foreign aid) received the previous year, which was $3.359 billion.
Nigeria has seen an increase in migrant remittances in the last few years. For instance, Nigerians in Diaspora remitted $22 billion in 2017. It was the highest in the sub-Saharan African region, followed by Senegal and Ghana with $2.2 billion each.
Currently, Africa’s largest economy is said to be among the top five in global remittances, and her Diaspora remittance market, according to experts, is well positioned to get bigger in coming years given her favourable demographics.
For instance, Nevin, in a report titled: “Nigeria Economic Outlook: Top 10 Themes For 2019”, noted that Nigeria is projected to add no fewer than 200 million people to her population of 196 million between last year and 2050.
The report, which was co-written by PwC Nigeria Senior Industry Associate Omosomi Omomia, and made available to The Nation, added that the country’s population is expected to surpass that of the United States, ranked the third most populous by 2050.
The many benefits of Diaspora remittances
According to the World Bank, the Nigerian remittance market is worth over $10 billion, making the Diaspora community a major enabler of growth and development, if properly channelled.
To experts, remittances are private unrequited transfers (i.e. payments for which no economic asset or benefit is obtained) sent from abroad to families and communities in a worker’s country of origin (or home country).
The remittances include cash and non-cash that flow through formal channels – electronic wire, or through informal channels like money or goods carried across borders.
They constitute the second largest financial inflow to many developing countries, exceeding international aid. They also have a distributive impact on households as income and consumption patterns are affected.
Remittances are mostly used by households for daily consumption and access to basic services, such as health, education, and housing. They also may be a vital source of income for people whose livelihoods are threatened by natural disasters or other calamities.
Remittances remain important sources of donations to those beyond the immediate family circle through formal or informal philanthropic initiatives.
However, when they are not used for immediate consumption needs or passed to charities, the savings and remittances of those living in the Diaspora can be turned into investments.
They can also offer governments and firms more means to finance infrastructure and business operations, while rewarding senders (i.e. migrant workers) with a financial return.
Indeed, the desire of Nigerians in the Diaspora to assist those people who have remained in their homelands can be turned into a driver for much needed savings and investments back home.
For instance, Nigeria’s booming real estate industry is said to be one the first points of call for Nigerians in Diaspora seeking for profitable investment areas. This is so because of the opportunities that come with the surge in urban development and population growth.
Already, there are mortgage propositions, for example, that link potential homeowners with vetted property developers and agents to ensure that the journey to home ownership is stress-free.
Diaspora remittances can also have transformative effects on livelihoods and communities with well-invested funds stimulating employment and income-generating opportunities.
The rising remittances are also said to have provided a useful source of foreign exchange, helping to raise reserves as well as maintain the stability of the naira. At a point in the fight for stable foreign exchange market in Nigeria, a definite policy on the flow channel and exchange rate was made.
Research has also found that increasing remittances lead to reduced poverty, enhance human and economic development since it provides income for households, education, healthcare, housing, small businesses and farming.
Recipients of these remittances, who are encouraged by the fact that remittances contribute to economic growth and to the livelihoods of people worldwide, tend to put more money into these sectors than those who do not receive any.
Generally, remittances are used for housing, consumption and education financing, with increased flows observed during “back to school and pre Christmas periods”.
However, beyond their well-known role as senders of remittances, Nigerians in the Diasporas also promote trade and foreign direct investment, create businesses and spur entrepreneurship. They also transfer new knowledge and skills.
These must be why experts have been calling on the government to remove obstacles to free flow of Diaspora remittances and create opportunities for Nigerians in the Diasporas to engage in development.
Some of the specific actions include identifying goals, mapping Diaspora location and skills, fostering a relationship of trust with the Diaspora, maintaining sophisticated means of communication with the Diaspora, and ultimately, encouraging Diaspora contributions to national development.
Innovative banking
solutions offer succour
To leverage the impact of remittances for families and the communities while curbing scepticism that may limit their prospects in making investments back home, the banking industry is providing solutions to the Diaspora that facilitate secure and profitable investments effortlessly.
Such technological interventions by the banking industry have made remittance transactions faster, cheaper and more convenient, making it possible to reach even the “last mile” of many remote areas in Nigeria.
Some banks that have thrown their hats into the remittance market include United Bank for Africa (UBA), First City Monument Bank (FCMB).
Others are Guaranty Trust Bank (GTBank), Union Bank, Ecobank, and First Bank. Their involvement was in response to the demand for financial service providers that combine strong a foothold across the continent with money transfer products that have extensive reach across Africa.
For instance, the Ecobank Rapid Transfer solution is a proprietary-send-and-receive money transfer product in Ecobank locations across Africa. The unique product facilitates easy transfer and access to funds across Nigeria and in all the countries across the continent where the foremost pan-African bank currently operates.
According to the bank’s Executive Director, Consumer Banking, Mrs. Carol Oyedeji, the product was conceived out of the need to provide convenient, accessible, and reliable money transfer service for its retail and wholesale customers and non-customers alike.
“This is a more convenient way we believe bank customers in Nigeria can be served better. The uniqueness of this product is its swiftness in delivery and accessibility as transactions are consummated instantly at the receiving end. No matter the bank you have your account in Africa, you can receive money through Rapid Transfer,” she said.
The Ecobank Rapid Transfer could be made through cash-to-cash, cash- to-account, account-to-cash, account-to-account and cash-pull transaction formats. The service offering also allows remittances to be received directly into the receiver’s personal bank accounts anywhere in the country and same accessed any day or time just like any other deposits.
With near or real-time connections, the receiver has access to the funds whenever he/she wants. Funds are available to receivers 24/7, 365 days in the year and they can easily retrieve money transfers from their accounts at night, during public holidays and on weekends, using any of the e-transfer channels – ATM, POS, Internet banking, Ecobank mobile App, sub-agency and physical withdrawal from the branches.
Speed, convenience and ease of mind are in-built features of this innovation. Fund is guaranteed to be securely deposited directly into receiver’s account with the risk of fraud and other malpractices hitherto associated with fund transfer receivership in the country eliminated.
First Bank, WorldRemit also
To boost the level of Diaspora remittance, First Bank Nigeria Limited and international remittance company WorldRemit sealed a deal last year to double the digital money transfer company’s number of transactions by the end of 2018.
At the launch of the partnership in Lagos, the Regional Director, Middle East and Africa, WorldRemit, Andrew Stewart, said with one million transactions to Nigeria already in the last 12 months, the partnership with First Bank was expected to double the figure over the next 12 months.
These, experts say, are indications that Nigeria is strategically positioned to take advantage of the emerging global cashless money transfer market, especially in the Diaspora remittance landscape, where the size of her remittance inflows has been increasing?