Posts

, , ,

Diaspora Remittance to Nigeria 

Remittance to Nigeria
The common saying “sending money back home” resonates greatly with the Nigerian diaspora. It pertains to the term “diaspora remittance” which involves a person living abroad sending money back to their country of origin. In the case of Nigeria, it is members of the diaspora sending money back home. As the largest recipient of diaspora remittance in Sub-Saharan Africa, remittance to Nigeria now constitutes a significant part of the GDP, namely 4% in 2020.

The Critics

Though some have contested that diaspora remittance is detrimental to Nigeria given that it arguably enables the government to dodge the responsibility of providing sufficient welfare for its citizens, it is not all doom and gloom. An often neglected point is that diaspora remittances are in fact beneficial in terms of sharing knowledge and skills, promoting trade and investment and fostering entrepreneurship within the country.

Unfortunately in Nigeria, this remittance has principally provided improved welfare for families as opposed to transparent investment and development of the nation, which could consequently prompt the diaspora to return if they so wish. Many families in rural areas are heavily reliant on remittances as the money sent is a large proportion of the recipient household’s total income, despite it paradoxically only being a minuscule part of the sender’s income. As such, the U.N. describes remittances as a “lifeline” for millions of families.

Whilst this is good news, one cannot ignore that when it comes to diaspora remittances, there remain issues of mismanagement and poor utilization of flows nationally. Examples are a notable lack of investment opportunities for skilled professionals abroad and the expensive cost of sending money back home.

The Effective Utilization of Remittance to Nigeria

The idea is that investing back home should be appealing and encouraged through the establishment of supportive initiatives. There have been some attempts, an example being “Naira4Dollar.” The Central Bank of Nigeria introduced this new scheme in February 2021 offering beneficiaries of remittances 5 nairas for every $1 of remittance sent through the bank.

Nevertheless, remittances have continuously allowed the Nigerian government to strategically take a back seat with regard to welfare, as it reassures government officials that Nigerian counterparts abroad will financially cover its families. It simply reduces the incentive to provide for the basic needs of their citizens. The current rampant levels of poverty and unemployment further support this, particularly among the youth despite increased remittance inflows from places like the U.S. and U.K., which, according to PWC, are large Nigerian diaspora communities.

This explains why, according to The Guardian, roughly 50% of Nigerians have announced themselves as willing to relocate abroad if able, primarily for the purpose of employment opportunities. However, to combat this tragic reality and at the same time ensure the investment of remittances in more than purely welfare, it is critical for governmental action.

The remittance to Nigeria increased in 2021 and, as Vanguard reports, it could increase in 2022 as well. However, there is a need for change in the management of remittance flows.

PowerhouseCoopers’ (PWC) Proposals

Luckily, PowerwaterhouseCoopers (PWC), a multinational professional services network, has made proposals to respond to this exact issue. PWC deems it crucial to the establishment of a clear policy to ensure the transformation of remittance inflows into funds for productive investments to develop enterprises and create employment. In the same breath, a philanthropic means of utilizing remittances will serve to provide further opportunities to develop infrastructures like schools, hospitals and roads.

All in all, one should not frown upon remittance to Nigeria. Whilst it may appear to be merely a short-term solution to Nigeria’s social and political issues, it can serve to be a long-term and sustainable solution. As the PWC has suggested, the issue can resolve through policy change fostering investment and employment opportunities, a process that has begun in Nigeria and evidently needs more development.

– Claudia Efemini
Photo: Unsplash

, , , , ,

The Impact of COVID-19 on Nigeria’s Economy

Nigeria's Economy
Nigeria, home to Africa’s largest economy, is facing consequences from the surge of COVID-19. After experiencing a recession in 2014, the country was finally seeing progress in its oil exports, resulting in overall financial recovery. That is until the pandemic hit. Nigeria is struggling to reignite its economy as the damages of the novel coronavirus persist. The country’s dependency on oil exports, along with the inevitable effects of a country-wide lockdown, are two reasons for Nigeria’s economic downturn. However, steps are being taken to boost Nigeria’s economy. This article articulates both the economic impact of COVID-19 in Nigeria and recent motions toward recovery.

COVID-19: The Numbers in Nigeria

According to the World Health Organization, Nigeria has seen over 38,000 cases of the coronavirus and over 800 deaths. In a country of around 214 million, the fatality rate is about 2% or 418,000 Nigerians. What does this mean for their economy?

Despite a recession from 2014 to 2016, The World Bank asserts that Nigeria’s economy may be headed toward the worst financial state the country has seen in four decades. Nigeria is extremely dependent on oil, which represents more than 80% of the country’s exports. With international travel halted due to COVID-19, the country has recorded an 18-year low on fuel prices, at $22 per barrel. According to economics experts, the Nigerian revenue flow will decrease to 1.1 trillion Naira (about $3 billion). That is about a 4.4 trillion Naira decline from the beginning of 2020.

The National Bureau of Statistics states that 42% of almost 2,000 citizens interviewed were out of work as a result of the pandemic. Out of all households interviewed, the poorest households saw the highest share of unemployment, at a jarring 45%. Moreover, 79% of reported households saw a decrease in their income as of March 2020.

Oil exports are not the only thing hurting Nigeria’s economy. Prices of common goods, like bread and water, increased shortly after a lockdown was enforced on March 30. A single loaf of bread increased from N350 to N450 (around ¢90 to $1.16). Pure, clean household water in Nigeria normally costs about N100, but since the pandemic, the price has doubled. As the consumption of goods, investments and net exports decrease, Nigeria’s economy is facing a harmful downturn.

The Good News

There remain reasons to be hopeful for Nigeria’s economy. Early in the pandemic, the National Orientation Agency (NOA) performed contact tracing calls to prevent the spread of COVID-19. These calls were made to people deemed “passengers of interest,” or those who had been traveling in recent weeks. Not only did these calls help slow the spread of the virus by enforcing self-isolation, but they also created a sense of comfort. The calls aided monitoring symptoms and provided psychological encouragement during an unprecedented time.

Nigeria’s government has also worked to help people financially impacted by COVID-19. The Central Bank of Nigeria (CBN) set out a 50 billion Naira ($139 million) stimulus package for Nigerian households and small to medium-sized businesses. Moreover, interest rates on CBN interventions decreased from 9% to 5% in an effort to aid Nigeria’s Economy.

UNICEF has also contributed to helping Nigeria throughout the COVID-19 pandemic. In collaboration with the Nigeria Center for Disease Control (NCDC), UNICEF is ensuring that all mothers with children under the age of two are able to safely breastfeed their babies, making sure they follow health guidelines.

With children out of school due to the pandemic, the National Agency for Food and Drug Administration and Control (NAFDAC) has provided training to mothers to screen their children for malnutrition. Many students depend on school lunches and considering the rate of job loss in Nigeria, this is a necessary step to ensure that all children are taken care of.

The pandemic has affected Nigeria’s economy and citizens to a grave extent. With oil exports reported at an 18-year low and job losses mounting, COVID-19 has destroyed whatever sense of progress Nigeria experienced since its last recession. With the support of the U.S International Affairs Budget, and with further foreign aid, Nigeria can hope for drastic changes in their job rates and oil exports.

– Anna Hoban
Photo: Flickr