Nigeria, Africa’s largest economy with an ever-growing entrepreneurial population, is an emerging country with huge potential. The Nigerian diaspora is spread across the globe from UAE to the UK.
According to a report by the Financial Times, the Nigerian diaspora is one of the most educated and thriving in the UK, with many working in the IT, legal and medical professions.
Nigerian expatriates regularly remit money back home to their friends and family for their well-being. This trend has made Nigeria the number one African country in terms of remittance recipients.
The World Bank reported that the Nigerian remittance flow stood at US$25.08 billion and estimated for 5.74% of the country’s GDP in 2018.
The growth of Nigerian remittances
Nigeria has cemented its position among the top five recipient nations globally, with India, China, the Philippines and Mexico.
Let us review the numbers that illustrate the role of remittance in the Nigerian economy. In 2018, remittances to Nigeria grew by 14% compared to 2017, which amounted to 83% of the Federal Government’s budget for that year. Over 17 million expatriates have made international money transfers to Nigeria in the last half a decade, representing a considerable spike in the remittance inflow.
Recently scholars conducted a study to determine the spending trends of money received as a remittance. It revealed that about 70% of the fund deployment was towards household consumption, education and healthcare expenditures. And the balance of 30% is re-invested, further fuelling the economy. Experts believe this trend will grow in the future. Furthermore, Nigeria’s growth of inward remittance will experience exponential growth in the future.
Factors behind the increase in money transfers to Nigeria
One of the most significant factors contributing to the rise in money remittance in Nigeria is global economic growth. This statement is true, particularly in the high-income OECD countries. Many OECD countries host Nigerian immigrants who send money back home to their friends and families. This attribute is crucial for the remittance flows to Nigeria.
Nigeria has continuously fostered measures to attract more remittance inflow that will fuel the country’s economic development. Measures include introducing the Certificate of Capital Importation (CCI) and floating a $300 million Nigerian diaspora bond. The CCI issued by the Nigerian banks has confirmed an inflow of foreign currency in cash or goods. In addition, Nigeria has also become a member of the International Association of Money Transfer Networks.
Despite the rise in global money transfers to Nigeria, the average cost for money transfers to Nigeria or Africa, in general, remains the highest in the world. According to the World Bank, the international average cost of remittance is 6.51% as of January 2021. In contrast, the charge to send money to Africa is relatively high at nearly 9%. This high cost has a chain effect on the immigrants and their families, the Nigerian remittance trends, and Africa’s economy.
With migration trends gaining momentum, more immigrants continue to make significant international money transfers to Nigeria. And with the growing remittance, we can expect policies dismantling current barriers and challenges. This recent growth in migration and remittance trend indicates a bright future for the country’s economy.
A secure and cost-effective money transfer solution is what the ever-growing Nigerian diaspora needs right now. We at ATL Money Transfer provide fast and secure money transfers to Nigeria at reasonable prices. We are committed to strengthening our services in Africa by building affordable and efficient money remittance channels for our African customers.
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