Nigerians abroad send at least $10 billion in remittances to their loved ones at home. This amount makes Nigeria the 6th highest destination for remittances according to the World Bank. That also makes Nigeria the top remittance destination on the African continent.
REMITTANCES IN THE NIGERIAN CONTEXT
Nigerians are expected to take care of a lot more than just their immediate family. As a result, the average Nigerian family consists of a mother, father, children and many dependents such as in laws, cousins, and sometimes, neighbors. Once a young Nigerian gets a job, and sometimes even before that, he or she must begin to contribute to dependents. For those living abroad, their foreign currency, when changed to local Naira can be a helpful financial addition.
WHY ARE REMITTANCES IMPORTANT?
Many immigrants abroad send a portion of their earnings to family members in their home country. In some cases, these remittances are the only income that those families have to live on. In a country like Nigeria with anywhere between 8 to 15 million Nigerians living abroad, remittances are a way to provide financial assistance. This is crucial on a personal level because of Nigeria's high unemployment rate. And, it is reported that the money sent to Nigeria through unconventional means is actually 4 times the amount reported.
On a fiscal level, remittances act as a source of capital second only to foreign direct investment. Unlike foreign direct investment which rises and falls on the whim of investors and business decisions, remittances are a stable and constant source of capital in the national economy. In 2005, remittances constituted 5% of Nigeria's GDP. With many Nigerians abroad sending remittances home for investment purposes (i.e. real estate purchases), this money allows those in the Diaspora to play a role in the country's development while bettering themselves.
Additionally, considering that Nigerians abroad have been granted the right to vote in Nigerian elections, their remittances do not just signify financial importance, but could also translate to political collateral. Whether this will be negative or positive is yet to be seen, but ultimately it is conceivable. Unfortunately, remittances are expected to drop between 2009 and 2011 as a result of the global economic slowdown.
It will be interesting to see how the federal government or state governments take advantage of the desire of Nigerians to not only send money to their relatives, but also use their money to improve the nation. There are many options, but it might be beneficial to give Nigerians around the world an opportunity to contribute to the development and advancement of their home nation.
From the Archives:
- Nigeria's Sovereign Wealth Fund