Global tax and consulting firm, Pricewaterhouse Coopers (PwC) has revealed that migrant remittance flows into Nigeria last year were 77.2 percent of the federal government’s budget, and over 10 times the foreign direct investment (FDI) flows. The country’s remittance inflows are also 6.8 times larger than the net official development assistance (foreign aid) of $3.4 billion received in 2018.
As contained in its latest White Paper Series titled Strength from Abroad: The Economic Power of Nigeria’s diaspora, PwC estimates that remittances to Nigeria could grow to $25.5 billion and $29.8 billion in 2019 and 2021, respectively. Meanwhile, over a 15-year period, total remittance flows are expected to grow by almost double in size from $18.37 billion in 2009 to $34.89 billion in 2023.
Last year, Nigeria accounted for over a third of migrant remittance flows to sub-Saharan Africa as the region received a small share of global remittances. While in Africa, the country, together with Egypt, accounted for the largest inflows of remittances. But despite representing a small percentage of global flows, official remittances to sub-Saharan Africa grew by 10 percent ($46 billion) in 2018.
“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,” the report noted.
According to PwC, the two main drivers of this increase are global economic growth, especially in high-income OECD countries and a rise in oil prices, which boosted economic activities in oil-producing countries globally.
Considering the huge role remittances play in economies (helping poorer recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses, service debt and essentially, drive economic growth), PwC recommended ways to harness remittances for the benefit of the Nigerian economy.
The multinational consultant highlighted the need to create platforms that increase the accessibility of crucial information for Nigerians in the diaspora as well as encourage and create pooled investment vehicles. Also, early-stage businesses with smaller financing needs present a great opportunity for those in the diaspora to invest through angel networks.
“The report is an analysis which shows the critical importance of the diaspora to Nigeria’s economy,” Partner & Chief Economist at PwC, Andrew S. Nevin said, urging Nigeria to establish a strategy for maximising the benefits of its diaspora.
According to him, the recently established Nigerians in Diaspora Commission (NiDCOM) led by Abike Dabiri-Erewa indicates that the federal government recognises the strategic importance of the Nigerian diaspora. Nevin added that the “key next step for the newly established commission is to formulate and execute a strategy to maximise the benefits of Nigeria’s diaspora.”
Furthermore, PwC advocates for a coherent policy framework required to harness remittances into generating capital. This capital could then be used for productive investments for the growth and development of small and micro-enterprises, which will, in turn, create employment.
“In addition, we’re very keen to see State Governments start to engage the diaspora. The primary benefit of remittances to recipient households is the improvement in their general welfare … So it is important Nigeria develop a diaspora strategy both at the national and state level,” Nevin added.