Enough of Nigeria’s dependence on diaspora remittances
Early this year 2021, the World Bank reported that diaspora remittance in Nigeria for the year 2020 fell to $17bn from $23 in 2019. Analysts attributed the use of alternative platforms powered by blockchain technology, partly, as a reason for the reduction. Since then the FG has taken steps not only to stabilise the Naira but increase diaspora remittances.
The crux of this article is to examine why the FG has relegated our timeless attribute of resilience and ingenuity as a nation, to focus on enhancing remittances from the diaspora rather than focus on empowering local enterprises with the potentials to generate foreign exchange to do so.
A few facts about Diaspora and Remittances
The word diaspora comes from the ancient Greek diaspeiro, meaning “to sow over’’. It is translated to mean “dispersion” or “scattering”. Most definition typically refers to the dispersion of the Jews. Wikipedia calls it “a scattered population whose origin lies in a separate geographic locale”. In 2020, total international migrants were estimated to be 281million people, that is, 3.6% of the world population out of which about 15 million is touted to be Nigerians. In 2017 alone, about 1.3m people left Nigeria in search of greener pastures.
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 non-cash items that flow through formal channels such as electronic wire, or informal channels, such as money or goods carried across borders.
In 2018, Nigerians abroad sent a total of $25bn representing about 6.1% of GDP that year which made Nigeria second in Africa after Egypt with $28bn. However, recent reports from the world bank show that in 2019, it dropped to $23.81bn; and in 2020, to $17.21bn representing four per cent of Nigeria’s Gross Domestic Product in 2020.
India estimated Diaspora population is 17.9 million it received $245.27bn in remittances in the three years between 2018 and 2020 while Nigeria with an estimated 15 million migrants received about $64bn within the same period. Bangladesh is estimated to have a Diaspora population of 7.4 million in 2020. It had a total remittance of $55.68bn from 2018 to 2020.
In 2020, the following five countries came tops globally for remittances inflow; India (83 billion), China (60 billion), Mexico (43 billion), the Philippines (35 billion), and Egypt (30 billion). India has occupied the top position since 2008. According to the World Bank, the decline in inflows to Sub-Saharan Africa was mostly due to a 28 per cent decline in remittance flows to Nigeria. Excluding flows to Nigeria, remittances to Sub-Saharan Africa increased by 2.3%, demonstrating resilience.
When remittances were measured against the GDP of recipient countries in 2020, it was 4.0% in Nigeria, 3.0% in India, and 6.6% in Bangladesh. It is also on record that remittance flows to low and middle-income countries (LMICs) reached $540 billion in 2020, just 1.6% below the 2019 total of $548 billion.
In 2020, the average cost of sending USD 200 to lower-middle-income countries remained high at 6.58%, well above the SDG target of 3%. The highest average remittance costs, at about 8.2% was seen in Sub-Sahara Africa while South Asia had the lowest average remittance costs at 4.9%. Others include; Europe and Central Asia (6.4%); East Asia and Pacific (6.9%); the Middle East and North Africa (6.6%); and Latin America and the Caribbean (5.6%).
Recent research by the World Bank published on its website revealed that about 50% of Nigeria’s population are willing to relocate abroad should they have the opportunity. In West Africa, Nigeria ranked 3rd after 70% of Liberians and 60% of Sierra Leoneans showed common interest. Among Nigerians who have considered emigration, their main reasons hover around economic, seeking employment, escaping economic hardship/poverty, and pursuing better business prospects. Other reasons include a good atmosphere, peaceful co-existence, food security, adequate employment, allured opportunities, provision of skills, good transportation sectors, good education, fewer conflicts, democratic elections, fewer thefts and arson as well as fewer means of taxation. In terms of contribution, Diaspora communities can make a unique contribution to the development of their home countries—especially toward building physical capital and productivity plus ultimately helping to boost job creation, living standards, and higher growth. In addition to supporting capital investment, diasporas also support productivity by funding education, training, and healthcare.
The issue of Remittances in Nigeria dates back to the early 60s when the first set of Nigerians that went abroad attempted to salvage the plight and economic status of those back home. Since there was no significant difference in the value of Naira to the dollar, it was not much of a big deal until the late 80s during the era of General Ibrahim Babangida. That was when the Naira was first devalued and Nigerians abroad realized the wisdom of sending a few dollars home only to be compensated with multiple Naira. In an article credited to the former finance minister, Chief Anthony Ani, the use of IMTOs like Western Union and MoneyGram contributed to the success experienced at the time, as many Nigerians that live abroad willingly sent money to their wards back home for one purpose or the other.
In searching for the meaning of Diaspora, I found the one by dictionary.com very interesting. It describes it as “any group that has been dispersed outside its traditional homeland, especially involuntarily, as Africans during the trans-Atlantic slave trade”. The dictionary may have attributed early migration to the trans-Atlantic slave trade but the Nigerian diaspora had its reason for migration. The existence of the Nigeria diaspora can be described under the following category;
Those whose quest for higher learning travelled abroad and upon realization of the environmental comparative advantage, decided not to return after their education. This set of people remained in their country of study to build that nation rather than return to help build Nigeria.
Those who travelled to seek a better life and to break their family away from poverty. This set of people are composed of non, partially and fully educated individuals. They simply travelled to make money to live a good life. There is no demographic, ethnocultural, geographical or religious limitation for those in this group.
Those whose migration was instigated by the ruling military junta. This set of people were composed of professionals, politicians, business owners etc. While some returned after the junta, many had established themselves and decided to build a future for their family.
Those that belong to the middle class feel that their continued stay in Nigeria will not give their children a global competitive edge. These sets are relocating in droves moving families and getting settled permanently abroad and hoping that their children would become global citizens.
Those youths with or without employment, skilled or unskilled that feel that the Nigerian polity has drowned their voices and that the gerontocratic leadership leaves them no room to blossom.
Those that are well to do, influential and live in affluence but have travelled to secure health insurance for their old age. This set of people believe that the health care system in Nigeria cannot support their old age and would rather relocate to where it would cost them next to enjoy life when they become senior citizens.
Those who are young professionals and are being enticed daily by global technology companies. It is not uncommon today to find young Nigerians relocating abroad to work for technology or technology-driven companies like Andela, Google, Microsoft etc.
Those professionals whose skills are in global high demands and claim to be frustrated and whose continuous cries for government intervention for better welfare have been ignored.
These categories share a common denominator in the failure of government and leaders to project hope and faith in the country of Nigeria. Their departure or migration would then easily fall under involuntary status. Of interest to me was the word “involuntary” in the above definition, and that is the deep and inner rationale of this article.
To be continued tomorrow