Diaspora remittances and Nigeria’s economic growth
Recently President Muhammadu Buhari (PMB) affirmed the growing importance of Diaspora remittances to the growth and development of Nigeria’s economy based on 2019 figures released by the World Bank. In the affirmation, PMB said: “$25 billion annual remittance by Nigerians in the Diaspora was more than 80percent of the country’s annual budget and formed about 6percent of the Gross Domestic Product (GDP)”.
This affirmation of the humungous Diaspora remittance amount should be a trigger for policy change on Diaspora matters and a precursor to considering a review of how Diaspora remittances can contribute to the growth of Nigeria’s economy, in the face of dwindling revenue. This article is an alternate view on how Diaspora remittances can have impact meaningfully on Nigeria’s development.
The Diaspora remittance economics is based on the theories of migration which are well explained in the history of trade and political economy between nations and different nationalities. One of the canons of migration is premised on human welfare, otherwise referred to as economic migration. Nigerians are no exceptions to attractions of economic migration, which formed the bedrock of why many Nigerian ethnic associations all over the world are active, of which Nigerians In Diaspora Organisation (NIDO) is but one. What is currently deficient is an evaluation of how migration and Diaspora policy decisions can impact on economic growth. Although good progress has been made with the enabling Act setting up the Nigerians In Diaspora Commission (NIDCOM),much can still be achieved in the area of Diaspora remittances program if an expanded responsibility is developed for NIDCOM. The envisaged expanded scope of NIDCOM activities is what this article is being explored.
A number of countries have used Diaspora remittance as deliberate economic policy which encourages their citizens to embark on economic migration. Philippines is reputed to be the world’s third highest net Diaspora remittance recipient country in which remittance is more than 10% of GDP. In 2018 and 2019 Diasporas remittance of Filipinos was $28.9 billion and $30.1 billion respectively. Filipino Diaspora have become a major factor in the economic and social life of Philippines as a country and Filipino economic migration is a government policy.
In India, Non-resident Indians (NRI) remittance contributions to the India GDP stood at 3.4% in 2018 and still constitutes a major part of the country’s overall economic development, standing at $79billion in 2019,followed by China and Mexico $67 billion and $36 billion respectively. NRI money transfers to India are mostly for healthcare, investments, savings and charities which positively impact the Indian economy.
In a similar vein, Pakistan Remittance Initiative has significantly attracted higher remittances from Pakistani Diaspora. The State Bank of Pakistan in its 2019 report expects an average of $20billion per year in a sustainable basis in Diaspora remittance which is considered important for overall macroeconomic stability and their positive impacts in improving lives of millions of Pakistani families.
Nigeria can at this period of slow economic growth and dwindling revenue reinvent her Diaspora remittance strategies by learning from experience of other countries. The activities of NIDCOM can be expanded to include developing projects to harness the potential of overseas remittances for poverty reduction and local economic development. This may include mass housing development and small-scale industries project in various states. A pilot project can be initiated in the six geopolitical zones of the country for a start. To achieve this NIDCOM should create a Diaspora Investment Development Division (DIDD) whose focus should be the development of platform for Nigerian overseas to invest their remittances on physical asset development. A special purpose Diaspora Bond can also be issued via the capital market processes. DIDD will also deal with creating an account solution with licensed money managers for a seamless investment account with banks and microfinance institutions for identifiable projects under the template of the commission.
In another view, government may allow NIDCOM to establish a Nigeria Diaspora Remittance Company exclusively for remittance of funds to Nigeria at zero fees. The Company will be similar to PNB Global remit a subsidiary of Philippines National Bank where non-resident Filipinos overseas remit money to their country. By adopting this option, government would have succeeded in eliminating high transfer fees being charged by MoneyGram, WesternUnion, World Remit and other private sector remittance companies currently operating in Nigeria
As a consequent to establishing a remittance company is for NIDCOM to create a Department of Economic Migration (DEM) where surplus manpower in the country can be encouraged to work abroad, with sole aim of creating a new sustainable pool of remittance prospects. The DEM will collaborate with other similar efforts in government who are handling Volunteers and quasi manpower services for other countries in Africa. The present trends why Nigerian professionals travel abroad should be formalised with government support, provided such citizen are willing to be government Diaspora candidate.
Last but not the least is the Diaspora risk management. Government must create a robust data base to register all Nigerians in Diaspora which may ultimately be used by Independent National Electoral Commission (INEC) on election and political parties matters as being done by other nations. Credible Diaspora data base is a challenge NIDCOM must consider in the risk management of the remittance policy programme.
DR. AKIN OLADEJI-JOHNBROWNE
(A Fellow of Institute of Chartered Accountants, Institute of Taxation Nigeria and Securities and Investment Institute, United Kingdom is currently based in Canada as Independent Public Policy Advisor)