Remittances can take many forms but are associated with working migrants that remit money to support their families and communities back home. This monetary support has positive effects on both education and health outcomes and also supports human capital development.
International migrants’ remittances are among the most researched subjects in contemporary globalisation scholarship and policy studies. Therefore, existing studies have exposed only positive economic impacts of remittances on households avoiding the social impacts of remittances within the broad kinship networks that drive Africans’ lives and livelihoods.
Nigeria dwarves all other African countries in terms of volume and value of remittance flows. Even though Nigeria is growing slower than its population, in 2017, it ranked sixth-highest in the world for the highest remittance inflow. It has the potential to become an economic powerhouse through the effective management of its abundant resources.
Nigeria Remittance Inflows and Outflows Over Time
Source: World Bank Migration and Remittances Data, 2018
Nigeria’s Remittance Inflows are Highest in Africa
In 2017 the Central Bank of Nigeria (CBN) contributed to improved global economic conditions. It was reported that remittances were worth 5.9% of the Nigerian GDP in 2017; an impressive figure given that Nigeria is Africa’s largest economy. The Nigerian capital market has accelerated rapidly since 2005, which led to the inflow of capital, and the country is considered to have joined the ranks of frontier markets. Various sources reported that informal flows contribute to 50% of remittances entering the country, vastly underestimated. The World Bank revealed that remittance outflows stood at around USD275 million in 2017, making Nigeria a clear net recipient of remittances.
Effects of Nigerian Diasporas’ Circular Migration on Nigeria’s Economic Growth
Circular migration has several positive impacts on both native and destination countries. It enables the destination country to meet labour shortages flexibly and address seasonal needs for the origin country. With the growing population of Nigeria, it is beneficial for labour surplus relief. The circular migration of the Nigerian diaspora enhances the income, skills, experience, creates opportunities for family members, and retains the respective valued cultural heritage.
However, circular migration benefits Nigeria’s economic growth because it reduces the risk of losing human capital permanently to brain drain. It is observed that the commitment of the Nigerian diasporas in their country of origin shows that they are more engaged in the economic activities of Nigeria, their homeland.
CBN’s Vision for a Cashless Society by Launching Electronic Payment Infrastructure Development
Nigeria has a vast set of regulations governing the remittances sector. Hence it covers almost every aspect of the industry and shows a great appetite for innovation. In 2007, CBN launched the Payment Systems Vision 2020, which identified a series of recommendations to increase the resilience of the payments system infrastructure. The main agenda was to encourage the usage of electronic payment methods. In addition, CBN introduced the use of credit and debit cards and electronic fund transfer (EFT) as part of the “cashless policy”. It was applicable on daily cash withdrawals to reduce physical cash in the economy and promote electronic transactions.
Migrants’ economic remittance is an important and growing source of foreign funds for several developing countries. The remittances of the diasporas serve as a vehicle towards the economic growth of such a country. Nigeria’s vast flow of inward remittances and the high number of personal transfers within the country present an exciting opportunity for the country’s economy. Therefore, Nigerians have a strong incentive to develop this sector further and ensure that remittance flows continue to increase.
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