• Monday, April 22, 2024
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Contradictions of Nigeria’s remittance industry

Turning diaspora remittances from consumption and social support to investments (2)

Every year, the Nigerian government goes to town with a microphone in complaint of how Nigerian graduates and talents are leaving the country for greener pastures in other countries. Interestingly, the same government also complains that diaspora remittances are dropping and affecting the economy.

Today, diaspora remittances are a significant contributor of foreign exchange. It is no surprise that the Central Bank of Nigeria (CBN) was ecstatic in August 2021, when it announced that the diaspora remittances had grown to $34 billion following its Naira4Dollar intervention.

We are not against the government exploiting the gains from its diaspora population. If anything, we think remittances do help the economy, however, it is not a sustainable strategy for long-term economic growth

The growth was significant as it surpassed the previous peak of $25 billion. Since then, the CBN has thrown everything at maintaining a sustainable growth rate for diaspora remittances.

Despite the interventions, the rate has not held up to expectations, and according to the World Bank, Nigeria contributed $19.2 billion to the total inflow into Africa by the end of 2021. The CBN is most likely to continue its interventions after the World Bank also predicted that Nigeria will see $29 billion from remittances in 2022, due to higher food prices.

We are not against the government exploiting the gains from its diaspora population. If anything, we think remittances do help the economy, however, it is not a sustainable strategy for long-term economic growth.

Nigeria has an economy that is dominated by consumption rather than production. So, once the remittances are received they will merely be used to service an import oriented economy. In other words, the money will simply go back to where it came from.

The country, therefore, needs to increase production for a sustainable growth in the economy. Sadly, production requires the best in human resources.

We believe that Nigerian leaders taking rent from a situation that is costing its economy more in terms of human capital does not bode well for the future.

The energy the government is putting in to attract more remittances could also be replicated in putting the country in a shape that will help reduce the thousands of young people the country is losing on a daily basis.

A recent report showed that the number of visas granted to Nigerian nationals, excluding visitors in the EU, grew from just over 19,000 in 2019 to more than 59,000 last year. More than 28,000 Nigerians have already arrived in the EU in the first quarter of 2022.

For the UK, Nigerian migrants also showed by far the biggest growth among the top five nationalities granted skilled work visas. For every talent that leaves the country, a local business is suffering because it cannot find suitable replacement in such short notice.

Last week, BusinessDay reported how banking operations could not run efficiently because many banks are losing their best workers to companies in the US and Europe.

Nigerian hospitals are bleeding the best talents in doctors and nurses, and patients are suffering for it. No less than 727 Nigerian-trained medical doctors have relocated to the UK between December 2021 and May 2022. And between March 2021 and March 2022, at least 7,256 Nigerian nurses have left for the UK also.

Unfortunately for many businesses, there are even scarce options for securing younger talents as the public universities remain on strike. Every week that passes millions of students languish in idleness and the few that can afford it seize the opportunity to relocate.

Read also: Nigerian Exchange records N1.506trn domestic, foreign transactions in 5 months

While we acknowledge that this is the season of political campaigns, the prevailing condition does not bode well for the ruling party. Nigerians deserve better hence many of them are leaving to places where they are treated better.

It is time the government put the brakes on the factors chasing the country’s best brains away. It is possible for Nigeria to generate even more diaspora remittances without having to chase its best brains away.

Alternatively, the government can create an environment so conducive that even when the best talents decide to travel outside to work, they would always come back willingly to contribute their ideas and expertise to the local economy. They can also help develop younger talents.