As mass emigration continues to shape Nigeria’s socio-economic landscape, experts predict that the country’s Diaspora remittances will reach an impressive $26 billion by 2025. This projection comes after a record-breaking $20.1 billion remittance in 2021, with the current year expected to surpass that figure.
A recent report by Agusto & Co. indicates that remittance flows into Nigeria will experience significant growth, benefiting from improved economic conditions in advanced economies. While Nigeria ranked second in Africa for diaspora remittances in 2021, trailing behind Egypt’s $28.3 billion, the trend suggests that Nigeria will likely claim the top spot this year.
The high poverty rate in Nigeria intensifies the dependence on foreign aid, making the support of dependents a crucial driving force behind remittances in the near to medium term. The correlation between remittances and immigrants’ income and the economic status of sending countries has been evident, as slow economic recovery and living cost crises in developed economies constrained remittance flows into Nigeria last year. The implementation of capital controls and other restrictive policies by the Central Bank of Nigeria (CBN) further hindered official inflows.
Remittances from the diaspora have played an increasingly vital role in Nigeria’s economy, serving as a significant source of foreign exchange earnings and a catalyst for economic growth and development. With more Nigerians seeking opportunities abroad due to the country’s challenging economic conditions, their remittances will continue to sustain the Nigerian economy. These funds have empowered dependents to fulfill essential needs, pursue education, access healthcare, and embark on entrepreneurial endeavors.
Looking ahead, the report emphasizes that Nigeria’s emigrant base mainly comprises the economically productive middle-class demographic, a positive indicator for sustained remittances. It highlights the importance of devising strategies specifically targeted at this age group to ensure the continuity of remittances. Furthermore, the substantial contribution of students to the emigrating population is expected to result in a surge of remittance inflows in the medium term.
The liberalization of the foreign exchange regime in June 2023, which unified all segments into a single exchange rate window (Investors and Exporters (I & E) Window), is anticipated to incentivize remittance inflows through official channels. The move is likely to improve the FX liquidity position, facilitating the repatriation of funds, especially for investment purposes.
As Nigeria’s emigrants continue to contribute significantly to the nation’s prosperity from abroad, remittances are poised to play an even more critical role in shaping the country’s economic landscape in the years to come.
