• Tuesday, June 18, 2024
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BusinessDay

‘Japa’ wave, festive season seen boosting remittances

Ever growing japa

The emigration of skilled Nigerian workers to other countries, popularly known as ‘japa’ (a Yoruba word for “run quickly”), and the festive season are expected to boost diaspora remittances into the country this year, analysts have said.

Data from the Central Bank of Nigeria showed that in the first quarter of this year, Nigeria recorded remittance inflow of $5.16 billion, which was a 17.3 percent increase from the fourth quarter of 2021 and a 20.2 percent increase from Q1 2021.

“If the Q1 figure is annualised, it is expected that remittances will increase to at least $20.64 billion, especially with the rise in migration,” Omobola Adu, an investment research analyst at Afrinvest, said.

He said economic activities have picked up globally, especially in the United States, whose labour data has improved.

Adu noted the rise in cost of living and inflation in the US and the United Kingdom, saying: “It is when wages are not rising in proportion with inflation that remittance inflow could drop.”

Tajudeen Ibrahim, director of research and strategy at Chapel Hill Denham, said before a decline could be expected in diaspora remittances, it would mean the “US economy is in recession, which is what most investors and economic experts are forecasting for 2023”.

“The last quarter of the year will definitely see an uptick in diaspora remittances because a lot of Nigerians in diaspora will come home with some form of financial returns,” he said.

“Remittances this year will be better than 2020 and 2021 because the other economies are recovering and we have Nigerians there sending money home,” Ebitonye Atte, an associate research analyst at United Capital Plc, said.

He said the high migration rate, especially to the UK, would also impact remittances positively this year.

Read also: Nigerian firms adjust employment criteria as ‘japa’ surges

According to the World Bank’s Migration and Development Brief, remittance inflows to Sub-Saharan Africa increased by 14.1 percent in 2021, with Nigeria as the largest recipient of inflows in the region. For 2022, remittances are projected to grow by seven percent.

Unfavorable macroeconomic conditions in Nigeria, which has been worsened by high inflation, unemployment and insecurity, among others, is forcing many Nigerians, especially youths, to leave the country.

Highly educated and skilled Nigerians have been migrating to other countries through study and work visas. For instance, data from the British government shows that the number of Nigerians granted sponsored study visas, also known as student visas, by the UK increased by 222.8 percent to 65,929 in June 2022 from 20,427 in the same period of 2021.

Further analysis of the official immigration data shows that the 65,929 student visas recorded was the highest in four years when compared with 7,132, 9,066 and 20,427 in 2019, 2020 and 2021 respectively.

The number of Nigerians with skilled work visas grew by 109.1 percent to 15,772 in June 2022. Canada’s study permits to Nigerians increased by 30.3 percent to 13,745 in 2021 from 10,550 in 2020.

PricewaterhouseCoopers, in a report titled ‘Strength from abroad: The economic power of Nigeria’s diaspora’, projected that remittances into Nigeria could reach $34.8 billion by 2023.

“The growth in remittances is subject to global economic forces, which could spur or hinder growth of remittance flows, growth in emigration, economic conditions of residing countries and poor economic fundamentals in the Nigerian economy,” the report said.

Abike Dabiri-Erewa, chairman and chief executive officer of Nigerians in Diaspora Commission, in an interview with BusinessDay, said the government and the CBN had come up with policies to improve remittances.

“Beyond remittances, we really want to do a lot more because remittances are to take care of families; we want a way that they can make investments and get returns on the investments,” she said.