Diaspora (Commonwealth Union) _ Diaspora remittances have become a cornerstone of Nigeria’s economy, with inflows exceeding foreign direct investment in recent years. According to the World Bank, these remittances reached $20.1 billion in 2022, contributing 4.7% to the nation’s GDP. A PwC report projects that remittances could surge to $34.8 billion by 2028 if strategically leveraged. However, despite their significant impact, experts argue that Nigeria has not yet maximized their transformative potential.
Remittances currently support individual welfare, but only 25% go toward productive investments, according to a study by the African Development Bank. Basic needs like food and shelter often consume the remainder. To reverse this trend, the government has launched initiatives such as diaspora bonds, which raised $300 million in 2017, and the Naira4Dollar scheme, offering rebates for remittances sent through formal channels. These efforts reflect growing recognition of the diaspora’s vital role in addressing economic challenges and stabilizing the country.
Yet, challenges persist. High transaction costs, which average 8.9% in Sub-Saharan Africa, and exchange rate disparities discourage remittances through formal channels, leading to a significant portion of foreign exchange bypassing the banking system entirely. This limits the potential of these funds to drive national development and industrial growth.
Stakeholders in the Organised Private Sector (OPS) emphasize the need for structured policies to harness the full potential of diaspora investments. Creating a business-friendly environment with incentives such as tax breaks, investment guarantees, and access to land could significantly enhance participation. Improved governance and transparency are also critical to building trust among Nigerians abroad and attracting formal investments.
Experts like Adewale-Smatt Oyerinde, Director-General of NECA, and financial analyst Tuyor Otubanjo stress the importance of leveraging remittances for productive ventures that spur job creation, boost foreign reserves, and fund infrastructure projects. They argue that fostering confidence and ensuring returns are essential to channel these funds into transformative economic initiatives.
By aligning policies to incentivize diaspora contributions and reduce barriers, Nigeria can unlock the potential of remittances as a strategic resource for sustainable development. With a coordinated approach, these inflows could shift from meeting immediate needs to catalyzing long-term growth and prosperity.
