• Monday, July 22, 2024
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How to attract over $100bn yearly remittances like India

How to attract over $100bn yearly remittances like India

Indians in diaspora sent a record $120 billion back home in 2023, surpassing the $100 billion mark for the second consecutive year.

This amount is nearly double the combined total of net foreign investments—both foreign direct investments (FDI) and portfolio investments—which stood at $54 billion for the year.

The World Bank forecasts that India’s remittances will grow by 3.7 percent in 2024 and 4 percent in 2025.

But the global lender says the Nigerian diaspora remit between $20 billion and $25 billion annually.

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Though India’s population is seven times Nigeria’s, the South Asian nation has done more to squeeze remittances off its 32 million diasporans than the West African nation.

Analysts say investment in education, especially in skills and talent development, is one of the things Nigeria can do to attract over $100 billion yearly remittances like India.

Muda Yusuf, chief executive of Centre for the Promotion of Private Enterprise, said India invests more in education and skills – medical or entertainment – which are in high demand abroad.

“If we must move up to that level, we need to invest in skills, which is of high demand globally,” Yusuf said.

“That investment must be very high. At the heart of it is investment in human capital, investment in education and development of our talents. If we invest in all of these, we will be able to achieve more than what we are achieving now.

“The second point is that we need to look at not only the high-level skills but also some low-level skills like the Philippines, next to India. They export a lot of skills in the area of maritime. They invest a lot in training care-givers. Many countries need a lot of care-givers for their ageing population,” he explained.

Yusuf stressed that Nigerians should be trained as plumbers, drivers and in other technical areas and sent abroad.

“Beyond top skills like medical doctors, ICT, we need to think out of the box and look at other areas in high demand, train citizens, and package them for export.”

He further advised Nigeria to take outsourcing programmes seriously like Indians.

For Yemi Kale, group chief economist and managing director, research and international cooperation, Afreximbank, population is a major factor.

“I don’t think this is an issue. India’s population is over five times more than Nigeria’s and their diaspora population is also much higher,” he said.

“Money you send depends on your population as well as economic activity engaged in,” he said, adding that it also depends on the ease of sending money back home, which speaks to domestic foreign exchange (FX) policies.

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Adetilewa Adebajo, chief executive officer, The CFG Advisory, said: “We need to improve the quality of our education system so that our graduates can become sellable abroad. Human capital development is key.”

The World Bank has estimated that there are around 1.7 million Nigerians living abroad. But this is a 2018/2019 data.

Nigerian officials and diaspora organizations cite figures ranging from five million to 15 million, including both documented and undocumented migrants.

A PwC Report entitled, ‘Strength from Abroad: The Economic Power of Nigeria’s Diaspora,” published in 2019, estimated the Nigerian diaspora population at over three million but acknowledged unofficial reports suggesting a much higher number.

Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, recently revealed that only 10 percent of the $20 billion in diaspora remittances for 2023 made it to the Nigerian foreign exchange market.

Mohammed Idris, minister of information and culture, said in March 2024 that the federal government has attracted $30 billion FDI to the real sector of the economy.

He quoted the World Bank’s estimates that $20 billion was sent to Nigeria in 2023. However, he said the majority of these funds were externalized via digital transfers from other countries.

The World Bank says remittances are a vital source of household income for low- and middle-income countries (LMICs). They alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher school enrollment rates for children in disadvantaged households.

Studies show that remittances help recipient households to build resilience, for example through financing better housing and coping with losses in the aftermath of disasters.

Remittances to Sub-Saharan Africa, the region most highly exposed to the effects of the global crisis, grew an estimated 5.2 percent to $53 billion in 2022, compared with 16.4 percent last year (due mainly to strong flows to Nigeria and Kenya).