Babajide Okeowo
Oyeyemi Awe lives in the United Kingdom. He emigrated to the UK about 15 years ago and works in Greensmiths, an artisan supermarket in London. Every month, he sends home some money to his aged parents, wife and children back in Nigeria for their upkeep and also to train his younger ones in school. As soon as his family members receive an alert of the money sent to them, there is a renewed frenzy and a trip to the Aboki the local Bureau de Change follows to convert the foreign currency into local currencies.
In the 15 years he had been in the UK, Awe has been able to complete a four-bedroom duplex in Lagos where his immediate family lives, another 10 rooms residential hostel at Akungba in Ondo State where he hails from for commercial purpose and another apartment also in Ondo State.
According to Tosin, the eldest son of Awe, “there is this euphoric feeling that pervades their home whenever daddy sends money home. We are also looked at differently by our friends because our daddy is in abroad,” he chuckled.
Efe Amenaghawon moved to Italy a few years ago after searching for a job to no avail after his graduation from the university. Tired of his jobless status, he shifted his focus to traveling out of the country. Luckily for him, one of his uncles, who had attained citizenship status in Italy came home for Yuletide in 2012. Efe pleaded with him to assist him and seeing the industrious nature of Efe, he promised to help when he got back to his base in Bergamo in Italy. True to his promise, a few months later, Efe was on a flight to Milan in Italy.
Before he left for Italy, Efe and his family were living in a two-bedroom flat in Uromi in Benin. Shortly after he left for Italy, he started sending money to his family back in Nigeria. In the short while he had been in Italy, the status of the family has changed considerably.
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The family has moved from their ramshackle two-bedroom apartment to a palatial duplex he built. The family now has their own car. He sends money home regularly to elevate the status of the family.
“It is a well-known fact in our community that our status has changed considerably since Efe left for Italy. We live a better life and who knows what would have been if he did not leave for Italy. Each festive period like Christmas and Easter is always a period to look forward to, as he will send money to us separately for the festivities to enable us to have a great time,” Ambrose, Efe’s younger brother, said.
The above scenarios aptly describe the issue of the Diaspora remittances in Nigeria. Yearly, millions of people migrate to other countries either legally or illegally; they cross oceans, rivers, deserts and mountains, they risk their lives to realise a dream, which is to simply have a decent job somewhere that enables them to financially support their families back home. To be able to send money home to support the family is, perhaps, the most important motivation for migration.
Immigrants remit money from abroad officially and unofficially to provide an economic lifeline to their families in poor countries. The cash received from the loved ones abroad are used to provide food, shelter, daily necessities, family events, funding the education of siblings and extended family members, for health care for the elderly, and may sometimes serve as seed capital or continuous business investment. Migrants even send money home for funerals that they will not even be able to attend.
In 2018 alone, Nigerians billion in the Diaspora remitted a total of $25.08 to the country, according to PricewaterhouseCoopers (PwC). This figure represents about 14% increase from 2017 and 83% of the Federal Government’s 2018 budget in value.
This figure is almost $3 billion higher than the World Bank’s previous estimate, which, at $22 billion, placed Nigeria with the highest remittance in-flow in Africa and fifth-highest globally, behind the likes of India, China, Philippines and Mexico in that order.
According to the report, the majority of the remittance into Nigeria came from the United States, United Kingdom, Switzerland, Germany, Russia, China among others. But according to online remittance service, Azimo the region that made the highest remittance to Nigeria in 2017 was Europe with $8.1 billion, higher than other top senders like the United States, other African countries and Arab states.
Remittance inflow has been on a steady increase for the last six years except in 2016 when it dropped by approximately 7%. As of 2017, there were 17 million Nigerians in diaspora according to the federal government. No doubt, this figure has grown over the years and will continue to grow which implies that the value of remittance inflow into Nigeria would continue to rise.
Worldwide, an estimated $689 billion (USD) was sent by migrants to individuals in their home countries in 2018, a 9% year on year increase from 2017, when the amount was $633 billion. Strong economic growth in major destination regions, oil price stability and the appreciation of currencies against the U.S. dollar helped fuel the first worldwide increase in remittances since 2014 according to economists at the World Bank. The 2018 and 2017 increases in remittances followed two consecutive years of decline in 2015 and 2016, the first back-to-back decline over three decades.
Most of the money ($529 billion) sent to home countries in 2018 was from the diaspora of low-and-middle-income countries. This money amounted to 77% of the total world remittance stock, registering a constant YoY increase since 1999, except for the 1.6% decrease recorded in 2016. This is the result of a significant share of immigrants sending part of their paycheck back to help their families in their home countries.
It is exceedingly difficult to fully capture the total remittances, bearing in mind that the reported data is the officially recorded data by Central Banks and national statistics offices. If informal channels remittances were to be included, its true size and social impact would be revealed to be much larger. This is especially true for Sub-Saharan Africa, where just 40% of the population use formal financial services and two-thirds of non-agriculture workers are part of the informal economy.
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Remittances to Sub-Saharan Africa also grew almost 10% to reach $46 billion in 2018, supported by strong economic conditions in high-income economies. Fifty-three percent $25 billion of the remittances to Sub-Saharan Africa are sent to Nigeria. Money sent home by the Nigerian diaspora is constantly growing and saw a 10.5% YoY increase in 2018. This is considered an important economic resource, making Nigeria the 5th top remittance receiving country in the world.
This money on the move competes with international aid as one of the biggest financial inflows to the country. It is 6.6 times larger than official development aid, according to a 2017 World Bank report, and 6.1% as a share of Nigeria’s GDP; while FDI only accounted for 0.93% of the GDP. At $25 billion, remittances are equivalent to 46% of the total exports of Nigeria in 2018.
Nigerian Economy may collapse without Diaspora Remittance
According to Kadaria Ahmed, the Nigerian economy will collapse if the country did not have the kind of remittance it gets from the Diaspora. This is even as she opined that Nigeria’s biggest export is not oil as erroneously believed, rather, Nigeria’s biggest export is Nigerians.
“Nigeria is not an oil based economy and our biggest export is not oil. Our biggest export is Nigerians. What it also means is that the only thing holding up the economy is the Diaspora; if we didn’t have this massive flow of remittances, I am pretty sure the economy would collapse” she said.
Speaking further, she expressed her disbelief that this issue is not top on the topic of discussion among economic experts
“What is confusing to me is why this is not discussed more. Official figures keep repeating that oil is our biggest export when it is not true. We have a flow of almost $40bn that is not discussed much, it is very difficult for me to understand how someone can claim to be analysing the Nigerian economy when they don’t look at the biggest item. The official inflow of migrant remittances into Nigeria in 2018 is estimated at $25bn, to put this in context, this is about 7% of Nigeria’s Gross Domestic Product, GDP. The total transfer from the Nigerian National Petroleum Corporation NNPC to the Government was a little less than the $11bn in 2018. This means that the Diaspora is providing more than double the Foreign Exchange FX to Nigeria than our oil provides to all levels of governments” she said.
Her position is expressly supported by the Chief Economist at PriceWaterCoopers (PwC) Nigeria, Prof Andrew Nevin, who said Nigeria’s citizens living outside the country are its biggest export.
The PwC’s Chief Economist, in a report titled, “Nigeria Economic Outlook: Top 10 Themes For 2019”, noted that remittances to Nigeria represent 6.1 percent of Gross Domestic Product (GDP), and translate to 83 percent of the Federal Government budget in 2018.
He said Nigeria’s migrant remittance inflows were also seven times larger than the net official development assistance (foreign aid) received in 2017 of $3.359 billion, stating that, “Nigeria’s biggest export is not oil; it is actually people, because of the remittances coming in.”
Similarly, Afrinvest, a leading investment banking firm stated that Nigeria is not an oil-producing country but a human capital producing country due to the fact that diaspora flows exceeded gross oil revenue.
“Diaspora remittances as of 2018 was $25.1bn while Gross oil revenue for 2018 was $18.2bn and the 2019 capital expenditure budget is $6.7bn. Gross oil revenue comprises of crude oil and gas sales, petroleum profit tax and royalties. According to these figures, categorically, Nigeria is a human capital producing country because diaspora flows far exceeds gross oil revenue receipts” the company had said.
There is still room for concern -Expert
According to Femi Odere, the Senior Special Assistant to Ekiti State governor on Diaspora Affairs, the Diaspora Remittance is a huge resource pool waiting to be tapped in Nigeria’s quest for economic growth and expansion but a lot still needed to be done and he expressed worries over the attendant brain drain associated with Diaspora remittances.
“While the Buhari administration should be credited with the establishment of the Office of Diaspora and Foreign Affairs in the Presidency for the first time in the country’s governance history under the leadership of Abike Dabiri-Erewa, it should also be pointed out that whatever policies that are already in place may not be commensurate with the tapping of not only the resource endowments of her Diaspora citizens, but may be inadequate to vigorously engage them in solving the developmental challenges in which they’ve acquired the right expertise in their host countries”
Similarly, Ahmed believes while the country rakes in huge amount in remittances, the effect cannot be over-emphasized.
“We, of course, can question whether this is helping us overall from an economic view as we lose people, but obviously people with skills are saying their skills cannot be monetized here. It may be true that African countries have lost a substantial proportion of their skilled workers through emigration or the “brain drain”, which is generally caused by a lack of economic opportunities and conflicts and other factors, but African countries also have benefited from the African Diaspora remittance for their economic growth” she added.
