Facilitating in-country diasporic for subnational IGR growth

Migration always takes centre stage when most ethnic groups trace their origin and why they are in their current location. Large-scale translocations still define the modern world. Historically, such a large-scale exodus of people resulted from social and economic factors such as war, famine, the search for water, land and other natural resources, etc. Transatlantic trade routes and the ensuing slave trade also triggered labour and trade-driven, albeit painfully catastrophic, forced dispersion that lasted centuries. In contrast to forced migration that defined slavery, the exodus of people out of their land of birth and from the society where they grew up to other lands in the modern era appears to be primarily driven by the

search for greener pastures. Greener pastures loosely incorporate better income, quality of life, and search for new knowledge and peace. Of course, there are many other reasons. The truism is that labour seeks where it receives better rewards. The same also applies to the search for peace and investments. For several decades, Indians migrated to foreign lands, focusing mainly, among others, on trading their competencies in information technology. KNOMAD/World Bank 2022 estimates suggest that diaspora remittances to India were approximately US$100 billion. In the same year, Mexico and Nigeria remitted US$60 billion and US$21 billion, respectively. The PwC also reported in 2020 that about 15 million Nigerians are in the diaspora. In 2018 diaspora remittance figures of $25.1 billion equaled 6.1 percent of GDP, 83 percent of the federal government budget, 113 percent of oil revenue, and 11 times more than the year’s FDI, according to KNOMAD, CBN, and PwC analyses. These prospects, however, are for the out-of-country diaspora.

On the other hand, although in-country diasporic presents virtually the same kind of opportunities, albeit for subnational governments, they receive scant attention. For simplicity, in-country diasporans are Nigerians living within the country but outside their states of origin. Before the 90s, diasporans comprised the in-country group and those living outside the country. Both groups are out exploiting the opportunities existing outside their states of origin. However, the differentiation became pronounced with the manifest deprecation of our economic and social lives. The primary separator is the exchange rate differences that set in in the late 1980s and gradually worsened. In 1983 one United States dollar was worth approximately Nigeria’s 72 kobo. At that time, N1.5 kobo fetched two dollars. Today, one dollar is worth about 500 naira. By implication, migrating overseas and earning multiple times stronger currencies than ours unquestionably confers more opportunities. And as foreign currencies grew stronger than ours, the attraction to migrate to those countries with better economic strengths and prospects heightened. But in-country migrations have not diminished either. Lagos, the commercial capital; Abuja, the political capital; Port Harcourt, the oil city; and Kano, are the four most popular cities Nigerians migrate to within the country. The herders from northern Nigeria also migrate to the southern parts of the country with better grasslands and also to sell the animal stock. People from the South Eastern parts of the country also have a reputation for migrating to virtually all parts of the country. According to a famous saying, any place where an Igbo man does not live or do business is unsafe. Subnational governments can therefore leverage in-country diaspora in much the same way they can of the offshore diaspora to their revenue expansion advantages.

Although remittances to their home states are one of the traditional advantages, it is usually a lot more than that. Most Nigerians in the in-country diaspora belong to the temporary migration category and identify with their home state, and typically make some real estate investments there. For example, a person with Igbo parentage born, raised and living in Lagos State commonly does not regard Lagos as the state of origin. This temporary diasporic mindset contrasts with the permanent migration orientation characterising most citizens of Europe and North America. It is common to hear that someone was originally from Texas [the place of birth and nationality of parents] but is now from California. The impermanence of most in-country diasporans makes it more beneficial for the subnational governments of origin. So beyond the remittances to people at home, there are several investments, particularly in building a home in the village, developing farmlands and sometimes growing other rural economic assets. Some go beyond that to establish social infrastructure such as public health facilities, public water facilities and so on. The ‘aku ruo uno’ [wealth must reach its home] philosophy of many cultures, particularly the Igbos, not only discourages permanent migration but insists that those earning income outside their state of origin must make their wealth come home. State and local governments can leverage this time-tested cultural ideology to create opportunities for enhancing their revenue prospects. But that is only possible by converting these in-country diaspora remittances into taxable assets and income-yielding projects.

In-country diaspora opportunity exploitation is, in many respects, consistent with the synergistic federalism idea. Albeit impractical policy pursuits, pro-brain drain initiatives by the federal government to curb out-of-country migration, given the socioeconomic realities on the ground, are erroneous. A famous African proverb holds that you cannot beat a child and prevent the same child from crying. The managers of the Nigerian economy flog Nigerian citizens severely and cannot prevent them from seeking solace elsewhere. However, state and local governments can slow the ‘Japa’ frenzy by investing and facilitating a prosperous in-country diasporic. Unarguably, there are tremendous economic opportunities within and across the country waiting for harvesters. The first step is for subnational governments interested in facilitating and promoting this cause of action to either set up a special purpose vehicle for that or outsource the same for identifying labour gaps and investment opportunities in-country. On the labour gap, focusing on the requirements of target industries in the private sector is a more realistic option. The operation’s vehicle must also act as a recruitment and human resource placement agency latently and fully work in the interests of the subnational governments promoting it. For instance, the Anambra State government may find out that most private-sector establishments in Bauchi and Gombe states require the services of database specialists. Aside from sourcing for qualified candidates from Anambra State that are interested in migrating to those states, it may provide additional capacity building and skill upgrades to enable those recommended to perform credibly well. On the investment side, the special purpose vehicle will also identify on an ongoing basis such investment prospects and present the same to those pre-registered to access such. To make this exercise worthwhile and result yielding, the state government may set aside some amount of money dispensable as credits through partner banks to support these diasporic investors.

A good question is how states and local governments investing in this programme can obtain maximum returns on their investment. Many analysts have proposed establishing a diaspora investment fund to facilitate in-country investments. That is, however, at the national level. State governments can do the same with several modifications that will enable them to deliver the expected results. The first is for the state and local governments not to hold more than 30 percent of the fund. Denying states and local governments the opportunity to control the investment is crucial in ensuring the fund’s protection from the usual excesses of some of the emperor-type governors currently in the country. The second is registering the fund with the Securities and Exchange Commission, which regulates its management. Professional and independent management of the fund will enhance the actualization of the fund’s goals. Thirdly, consistent with the purposes of the fund, not less than 80 percent of the fund will be invested within the state following its defined investment charter. Fourthly, the state’s in-country diasporic facilitation beneficiaries shall commit to investing a pre-agreed proportion of their income [as individual workers and corporates] in the fund over an agreed period.

The benefits of the in-country diaspora development fund are numerous. The first is the mutually beneficial economic development between the states and local governments receiving the human and other valuable factor resources. Knowledge is the biggest driver of the growth of any economy. The inflow of expertise from other states facilitates the transfer of skills to the benefit of the state. Lagos State no doubt has the largest pool of talent in Nigeria, driven by the continuous migration of expertise from across the country and overseas and the massive transfer of those skills and talents within organisations and by capacity development businesses.

The second but obvious benefit is the mutually beneficial employment opportunities. Although the beneficiary states have a larger share of this, the human resource supplier states have advantages from the eventual remittances and the mobilisation of investable resources for its prosperity.

Finally, as good as this initiative sounds, there are some challenges in realising the target objectives. The most obvious is the prevalence of short-term transactional mindedness of most state governors. There is no gain in saying this programme cannot fruiten in the short term. More so, it does not provide much room for kickback rents, which regrettably is primarily the driving motivation for most projects and programmes of our state governments. The second challenge is the possible politicization of the process. Labour exports must stand on sound and demonstrable expertise. Hiring and posting substandard and poorly qualified human resources or personnel selected based on quota and other non-merit processes will only guarantee the early mortality of the programme. The same applies to influencing the advancement of credits to would-be investors, which may lead to the loss of the capital or funds meant for this purpose. Ideally, only eligible candidates and investors that pass the credit eligibility tests and fully satisfy the requirements for accessing such credit facilities should receive them. The less professionalism takes the driver’s seat, the more difficult it is to achieve the programme’s objectives. On the whole, states and local governments can play leading roles in supporting their citizens to exploit the numerous economic opportunities in the country, which benefits virtually all the stakeholders involved.

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