Diaspora remittances could hit $34.8bn in three years – PwC

Remittances from migrants to Nigeria could grow to US$25.5bn, US$29.8bn and US$34.8bn in 2019, 2021 and 2023 respectively, indicating how important these inflows are becoming to the Nigerian economy, a new PwC report has found.

For four consecutive years, official remittances have exceeded Nigeria’s oil revenues but these figures could be considerably higher considering that many transactions are unrecorded or take place through informal channels, PwC said in a release.

“The report is an analysis which shows the critical importance of the diaspora to Nigeria’s economy,” said Andrew Nevin, partner & chief economist at PwC.

Nevin said the recently established Nigerians in Diaspora Commission (NiDCOM) led by Abike Dabiri-Erewa, indicates that the Federal Government recognises the strategic importance of the Nigerian diaspora.

“The key next steps for the newly established Commission are to formulate and execute a strategy to maximise the benefits of Nigeria’s diaspora.”

In April, the World Bank in its Migration and Development brief estimates that officially recorded annual remittance flows to low- and middle-income countries reached $529 billion in 2018, an increase of 9.6 percent over the previous record high of $483 billion in 2017.

Global remittances, which include flows to high-income countries, reached $689 billion in 2018, up from $633 billion in 2017.

Nigeria accounts for over a third of migrant remittance flows to Sub-Saharan Africa PwC report said. The 2018 migrant remittances translates to 77.2% of the Federal Government budget in 2018 and 10.1 times the FDI flows in the same

period. Nigeria’s remittance inflows was also 6.8 times larger than the net official development assistance (foreign aid) received in 2018 of US$3.4 billion

In Africa, Egypt and Nigeria account for the largest inflows of remittances into in 2018.

Nevin further said, “We’re very keen to see State Governments start to engage the diaspora. The primary benefits of remittances to recipient households is the improvement in their general welfare, and studies show that 70% of remittances are used for consumption purposes, while 30% of remittance funds go to investment-related uses. So it is important that Nigeria has a diaspora strategy both at the national and state level.”

According to a 2017 United Nations report, there are 1.24 million migrants from Nigeria in the diaspora but this figure is likely to be higher in 2018 and 2019 with the recent trend in migration from the country, PwC said.

Almost half of Nigerian adults have indicated their willingness to leave the country in the next five years, according to a 2018 survey conducted by the Pew Research Centre. This feeds the estimates that remittances will be higher.

The PwC report cited findings from a study by the United Nations Conference on Trade and Development (UNCTAD) on the impact of remittances on developing countries which said that remittances have had direct impact on the overall economy, as well as the consumption and investment of households.

However to get the most from diaspora remittances and make them contribute to national development, PwC recommends the creation of national platforms that increase accessibility of crucial information for Nigerians in the diaspora.

The report also encouraged the creation of pooled investment vehicles. “One of the major barriers to investing for those in the diaspora is the minimum amount of funds, which investing firms accept. Therefore, pooled investment vehicles where members of Diaspora can be vetted and can aggregate funds for private equity investment for example, would encourage greater investments.”

Early-stage businesses with smaller financing needs, presents a great opportunity for those in the diaspora to invest through angel networks, the report recommended.

This is because “Such efforts will also encourage employment-generating activities, reduce further emigration and save workers from exploitative conditions abroad by providing them alternative livelihood options in their own country,” the report said.