Analysts are anticipating a slowdown in the amount of money coming into Nigeria from the United States following a decision by the White House restricting citizens of Africa’s largest economy from accessing immigrant visas. The move is expected to hurt the growth of diaspora inflows which global consulting firm PricewaterhouseCoopers estimates to reach $34.8 billion by 2023.
“The decision will have a significant impact on Nigeria’s diaspora remittance – which accounts for a sizeable chunk of our FX earnings – as less of its citizens will be in a good position to work and repatriate the much-needed capital back to the country,” said Bongo Adi, senior economist at Lagos Business School (LBS).
Adi described the immigration ban as “draconian” as statistics have shown that Nigerian immigrants are the most productive ethnic group in the US.
“Our statistics have shown that more than 4 percent of Nigerians have a PhD as opposed to an average of 1 percent of US citizens, while about 17 percent have a Masters compared to 11 percent of US, showing that Nigerians are outperforming the US average when it comes to skills acquisition,” Adi told BusinessDay on phone.
The Donald Trump administration had on January 31 placed Nigeria alongside five other countries on its immigration ban list, citing poor identity-management and a lack of transparency in sharing information pertaining to security.
Although the new restriction, which is expected to take effect February 22, does not affect Nigerians going to the US on a temporary basis, such as for tourist, business and official visits, it would, however, affect thousands of Nigerians eying to relocate to the US for greener pastures. Nigeria attracted $25.5 billion as diaspora inflows into the country in 2018. In 2017, the United States accounted for the largest chunk of remittances inflows into Nigeria, worth some $6.2 billion, according to data compiled by PwC.
That’s about 9 percent of the total $22 billion diaspora inflows which came into Africa’s most populous country in the period. Nigerians living in the United Kingdom sent in $4.119 billion in the same period. Cameroun, a central African country, came next with $2.5 billion remittances, while Italy, Ghana, Spain, Germany, Benin, Ireland, and Canada followed at $1.05 billion, $847 million, $771 million, $699 million, $652 million, $473 million and $436 million, respectively. “What we might see following the ban is that there will be fewer Nigerians over there which might slow down diaspora remittances,” said Andrew Nevin, PwC chief economist.
Data released by the United States statistics department show that about 8,018 immigrant visas were issued to Nigeria alone as at the end of the 2018 fiscal year. This figure more than doubles the number of immigrant visas which the White House issued to citizens of Myanmar, Eritrea, Kyrgyzstan, Sudan, and Tanzania – the five countries on the immigration ban list with Nigeria. Diaspora remittances have been the biggest source of inflows in Africa’s biggest economy, even more than oil which contributes over 85 percent of the country’s foreign exchange earnings and more than 70 percent of its entire revenue. Since 2015, at the peak of the collapse in oil prices that started a year earlier, the amount of money sent in by Nigerians living abroad through official channels overtook receipts from oil.
While diaspora remittances into the country have surged 20.6 percent to $25.1 billion in 2018 from $20.8 billion in 2014, revenue from oil fell 57.4 percent from as high as $42.7 billion in 2014 to $18 billion in 2018, according to data obtained from the Central Bank’s quarterly reports and compiled by BusinessDay. This situation has made analysts argue that Africa’s largest economy is a human capital-producing country rather than an oil-producing one. “We can trace the growth in remittances to the rising wages abroad which are products of tax cuts in America and increases in the minimum wage in parts of America and Europe,” said Emeka Ucheaga, CEO at Lagos-based investment and advisory firm, EUA Intelligence.
