By Cynthia Ezekwe.
Pan-African credit rating agency,Agusto & Co., has projected that remittance flows into Nigeria will reach $26 billion by 2025, a significant increase from $20.1 billion recorded in 2021.
The agency stated this in a report titled ‘Nigeria Diaspora Remittances: A Tale of Emigration, Policy and Technology’, noting that the flows will be supported by improved economic conditions in advanced economies.
According to Agusto, Nigeria’s emigrant base is currently placed towards the economically productive middle-class demographic, which is positive for remittances, adding that with $20.1 billion in remittances in 2021, Nigeria was the second-highest recipient in Africa, trailing only Egypt’s which stood at $28.3 billion.
The agency emphasised that although Egypt and Nigeria received over half of all remittances to Africa, the rise in inflows into Egypt remained robust, at double digits of 16 per cent, while growth in Nigeria slowed to 3 per cent.
It added that remittances have proven to be positively correlated with the income of immigrants and economic conditions in the sending countries.
“The slow economic recovery and cost of living crises that confronted many developed economies in 2022 were indicative of this trend and constrained remittance flows into Nigeria. This was further exacerbated by the implementation of capital controls and other unpopular policies by the Central Bank of Nigeria (CBN), which restricted inflows through official channels,’’ the report noted
It further pointed out that remittances from the diaspora have played an increasingly essential role in Nigeria’s economy, serving as an important source of foreign exchange earnings and a catalyst for economic growth and development.
“As more Nigerians, discouraged by the country’s gloomy economic conditions, look overseas for the opportunity, their remittances will continue to play a crucial role in sustaining the Nigerian economy. The growth of these funds has been exceptional, empowering dependents to meet their basic needs, pursue education, access healthcare, and embark on entrepreneurial endeavours,” the agency added.
According to Agusto, Nigeria has been dealing with the challenge of emigration and brain drain for decades because of the rising number of people fleeing in search of greener pastures amid the country’s dim economic prospects.
The credit rating company noted that the growing trend in emigration has left many businesses severely understaffed, which has stunted the expansion of a variety of industries and lowered tax revenues for the government.
However, remittances from the diaspora provide foreign exchange and capital injections to stimulate economic activity.
Agusto explained that in recent years, the rapidly growing global adoption of mobile devices has driven the use of digital technology in remittance services and cross-border payments.
It added that there has been a shift to Fintech Money Transfer Operators (MTOs), which provide users with a faster, more convenient, and cost-effective remittance experience.
