Strength

from Abroad
The Economic
Power of Nigeria’s
Diaspora

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In this paper, we take a close look at the volume and value of remittance flows into the country, as
Welcome to the latest in well as regionally and globally. In addition, the paper also highlights the potential importance to the
PwC Nigeria's White Paper Nigerian economy, and tries to answer the following questions:
Series, which examines the Ÿ What are remittances and what relevance do they hold for a country's economy?
big issues in the Nigerian Ÿ What is the trend in global remittances and what are the factors driving these trends?
Ÿ Which countries account for the largest inflows in Sub-Saharan Africa (SSA)?
economy and society Ÿ How much remittances flow into Nigeria?
Ÿ What are the top countries that account for the significant share of remittance flows into Nigeria?
Ÿ What is the population of Nigerian migrants overseas? What is the future growth of this diaspora?
Ÿ What is the importance of, and the contribution of remittances to the Nigerian economy?
Ÿ How do we take advantage of these flows for national growth and development?

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PwC 1
 Executive summary
Official records indicate that there are 1.24 million migrants from Nigeria in Nigeria's remittance inflows was also 7.4 times larger than the net official
the diaspora (United Nations, 2017). This figure is likely to be higher in 2018 development assistance (foreign aid) received in 2017 of US$3.4 billion.
and 2019 with the recent trend in migration from the country. Almost half of
Nigerian adults have indicated their willingness to leave the country in the PwC estimates that migrant remittances to Nigeria could grow to
next five years, according to a 2018 survey conducted by the Pew Research US$25.5bn, US$29.8bn and US$34.8bn in 2019, 2021 and 2023
Centre. respectively. Over a 15-year period, PwC expects total remittance flows to
Nigeria to grow by almost double in size from US$18.37 billion in 2009 to
Consequently, Nigeria accounts for over a third of migrant remittance flows US$34.89 billion in 2023. The growth in remittances is subject to global
to Sub-Saharan Africa. PwC estimated that these flows amounted to economic forces, which could spur or hinder growth of remittance flows,
US$23.63 billion (2017: US$22 billion) in 2018, and represented 6.1% of Other factors that will drive remittance flows include growth in emigration
Nigeria's GDP. rate, economic conditions of the resident countries and the economic
fundamentals in the Nigerian economy. The World Bank forecasts global
The 2018 migrant remittances translates to 83% of the Federal Government growth to slow to 2.6% in 2019.
budget in 2018 and 11 times the FDI flows in the same period.

2017 2018 & 2019 Migrant remittance flows to Nigeria

2017 2018

1.24 million Likely higher

migrants from Nigeria migrants from Nigeria
in the diaspora in the diaspora US$22.00 billion US$23.63 billion
represented 6.1% of Nigeria's GDP. These flows
also represented growth of 14% year-on-year
from $22 billion in 2017.

2018
Nigeria's remittance inflows was also 7.4 times
larger than the net official development
11 times assistance (foreign aid) received in 2017 of
the Foreign Direct
migrant remittances Investment flows in the
translate to same period

83%
of the Federal Government
budget in 2018 US$3.4 billion

PwC estimates that migrant remittances to Nigeria could grow to

The growth in remittances is subject to global

2019 2021 2023 economic forces, which could spur or hinder
growth of remittance flows, growth in emigration,
economic conditions of residing countries and poor
economic fundamentals in the Nigerian economy.

The World Bank forecasts

global growth to slow to
US$25.5 billion US$29.8 billion US$34.8 billion
2.6%
in 2019

2 Economic Power of the Diaspora

Introduction
According to the IMF, remittances represent household income from foreign
economies arising mainly from the temporary or permanent movement of
people to those economies. Remittances include cash and noncash items
that flow through formal channels such as electronic wire, or through
informal channels, such as money or goods carried across borders.

The importance of remittances is in the role they play in economies. They

help poorer recipients meet basic needs, fund cash and non-cash
investments, finance education, foster new businesses, service debt and
essentially, drive economic growth. Empirical studies show that the primary
benefits of remittances to recipient households is the improvement in their
general welfare. According to analysts, 70% of remittances are used for
consumption purposes, while 30% of remittance funds go to investment-
related uses.

Global remittances and trends

The World Bank estimated that global remittances grew by 10% to $689 The SSA region received a small share of the global remittances in 2018,
billion (2017: $633 billion) in 2018, with developing countries receiving 77% with Nigeria accounting for over a third of regional inflows. Despite
or $528 billion of the total inflows. India, China, Mexico, the Philippines and representing a small percentage of global flows, official remittances to Sub-
Egypt are among the largest remittance recipients globally, collectively Saharan Africa grew by 10% to $46 billion in 2018. The World Bank also
accounting for approximately 36% of total inflows. projects remittances to the region will grow by 4.2% in 2019, due to a
moderation in global growth.
The official recorded remittances are much lower than the actual
remittances that take place through official and unofficial channels. According to the International Monetary Fund (IMF), remittances sent to SSA
Remittances through informal channels could add at least 50% to the through informal channels, at 45 to 65% of formal flows, are significantly
globally recorded flows (World Bank, 2006, ibid. 85). Freund and Spatafora higher than in other regions. Overall, remittance flows are anticipated to
(2005) estimate informal remittances to amount to between 35 and 75% of keep expanding as a result of two factors: projected strong regional
officially recorded flows. economic growth in 2019 and large intra-regional migration flows from the
SSA region. It is therefore imperative that countries in the region, especially
Nigeria, take advantage of this trend in the course of strategic economic
decision-making.

Remittance flows to Africa

Egypt and Nigeria account for the largest inflows of remittances into Africa Brief attributes the rebound experienced in the global remittance industry to
in 2018. In 2017, Nigeria led the Continent in terms of remittance receipts economic growth in Europe, the Russian Federation and the United States.
but dropped to second place behind Egypt in 2018. There are two main Second, there was a rise in oil prices, which boosted economic activities in
reasons behind this growth. First, global economic growth, especially in oil-producing countries worldwide.
high-income OECD countries. The World Bank Migration and Development

Top Remittance Receivers in Africa (2018), US$Million

Egypt, Arab Rep. 28,918

Nigeria 25,081

Morocco 7,375

Ghana 3,803

Kenya 2,720

Senegal 2,213

Tunisia 2,027

Algeria 1,933

Zimbabwe 1,856

Congo, Dem. Rep. 1,405

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000

Source: KNOMAD

PwC 3
 Nigerian Diaspora, Remittances and Contributions to National Development
For four consecutive years, official remittances have exceeded Nigeria's oil revenues.

Comparative analysis of oil revenues and

Nigeria's Remittance Flows as a % of GDP
remittance inflows (2014-2018), US$’Billions)

8% 42.7
45
7.0%
7% 40
6.0% 6.0% 6.1%
35
6% 5.4%
5.0% 4.9% 30
4.5% 25.1
5% 4.4% 22.0
4.1% 25 20.8 21.2
3.8% 19.7 18.0
4% 20
15
13.4 13.4
3% 10.4
10
2% 5
1% 0
2014 2015 2016 2017 2018
0% Migrant remittance inflows Oil revenues
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: World Bank, PwC Analysis Source: KNOMAD, CBN, PwC Analysis

Since many transactions are unrecorded or take place through informal The 2018 figure translates to 83% of the Federal Government budget in
channels, the actual amount of remittance flows into the country is arguably 2018 and 11 times the FDI flows in the same period. Nigeria's remittance
higher. In 2018, migrant remittances to Nigeria equaled US$25 billion, inflows was also 7 times larger than the net official development assistance
representing 6.1% of GDP. This also represents 14% year-on-year growth (foreign aid) received in 2017 (US$3.4 billion.)
from the $22 billion receipt in 2017.

Nigerian Diaspora, Remittances and Contributions to National Development

Recognising the strategic importance of the Nigerian diaspora, the Federal Abike Dabiri-Erewa was appointed as the first chairman and chief executive
Government signed the the Nigerians in Diaspora Commission officer of the Commission.
Establishment Bill into law in July 2017.
In 2019, the Federal Government went a step further by recognising July 25
The Law established the Nigerians in Diaspora Commission (NiDCOM), of every year as National diaspora day.
which was set up to engage and utilise the human, capital and material
resources of this demography in the socio-economic, cultural and political
development of Nigeria.

4 Economic Power of the Diaspora

Migrant population
As of 2017, the number of international migrants worldwide stood at almost This category also account for the remittance flows to Nigeria.
258 million (or 3.4 percent of the world's population), according to UN Unofficial reports state that there are about 15 million Nigerians in the
Population Division estimates. According to the UN migration data portal, diaspora.The table below highlights the top country destinations for
there were 1.3 million emigrants from Nigeria in 2017, which represented Nigerian emigrants and the top countries from where the bulk of
0.6% of the total population (net migration is ~300,000 in the last 5 years). remittances flow from.
Though the official records do not include those born of Nigerian parents in
the diaspora and therefore, hold citizenship of their birth countries.

Top country destinations for Nigerian Top 10 remittance-sending countries to

emigrants (2017), population Nigeria, US$'millions (2017)

300,000 280,000 Canada 436

Ireland 473
250,000
210,000 Benin 652
200,000 Germany 699

Spain 771
150,000
120,000 Ghana 874
100,000
100,000 Italy 1,047
70,000
60,000
50,000 Cameroon 2,510
50,000
United Kingdom 4,119
0 United States 6,191
a
n

nin
tes

ly
r
gd ed

ge

an
ou

Ita
om
Kin Unit
ta

Be
Ni

Gh
er

- 2,000 4,000 6,000 8,000

dS

m
Ca
ite
Un

UN-DESA, PwC Analysis KNOMAD, PwC Analysis

Remittances from the United States amounted to US$6.19 billion in 2017 of Nigerian adults have indicated their willingness to leave the country in
and accounted for 9% of the total remittance outflows from the country in the next five years. According to findings from the survey, 45% of adults
the same period. The United States accounts for 22.6% of the total reveal that that they plan to emigrate from the country in the period stated
emigrants from Nigeria in the diaspora. Remittance per capita from the above. This is the highest share among the 12 countries surveyed across 4
Nigerian diaspora in the U.S. to Nigeria is US$22,107 per emigrant. Continents.
According to a survey conducted by the Pew Research Centre, almost half

International migrant statistics for Nigeria, 1990 - 2017

1.4 0.8%
1.2 0.7%
0.6%
1
0.5%
0.8
0.4%
0.6
0.3%
0.4 0.2%
0.2 0.1%
0 0.0%
1990 1995 2000 2005 2010 2015 2017

Nigeria international migrants International migrant stock as a percentage of total population

Source: UN DESA 2017

PwC 5
 Impact of remittances on economic growth
Against increasing migration, lower growth forecasts, declining standard of
living and rising insecurity, remittance inflows were projected using a
simple model to forecast growth for the next five years as shown in the
graph below:

Nigeria: Migrant remittance inflows (2009 - 2023f), US$ million

40,000 15%
34,888
35,000 32,306
29,903 10%
30,000 27,664
25,578
25,000 23,632
20,806 21,158 22,001 5%
19,745 20,617 20,543 20,797
19,679
20,000 18,368

15,000 0%

10,000
-5%
5,000

- -10%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019f 2020f 2021f 2022f 2023f

Migrant remittance inflows (US$ million) Growth rate %

Source: KNOMAD, PwC projections, (2018 figure is PwC estimate)

Some global studies have attempted to reflect the direct impact of Ÿ Adams (2005a) study takes data from a 2000 survey of 7,276
remittances on the overall economy, as well as the consumption and households, in both rural and urban Guatemala, and compares the
investment of households in developing countries. Below are findings from marginal budget share of remittance receiving and non-remittance
a report by the United Nations Conference on Trade and Development receiving households on six consumption and investment goods. The
(UNCTAD) on the impact of remittances on developing countries: findings show that the households receiving international remittances
spend more at the margin on investment goods, especially, on housing
Ÿ A study conducted in Mexico reflected that for every $2 billion in and education, and spend less, at the margin, on food items.
remittances that entered the country, production in the economy
increased by over $6.5 billion (Durand et al, 1996). Ÿ Yang (2004) analyses how the exchange rate shocks during 1997 due
to the Asian Financial Crisis affected the expenditure pattern of 1,646
Ÿ Asiedu (2003) revealed that nearly 30% of remittances are used for the Filipino households receiving international remittances. Of the several
purpose of investment and construction of houses in Ghana. findings in this paper, one of its findings shows that favourable
exchange rate shocks (i.e. more remittances income as a result of
Ÿ A 1988 survey of 1,526 Egyptian migrants (McCormick and Wahba, favourable exchange rate shocks) increases the investment of
2001) showed that even though the results differ for literate and remittances receiving household in entrepreneurial activities specifically
illiterate migrants, two factors – time spent working abroad and total in transportation, communication and manufacturing enterprises.
amount of money saved abroad – have positive and significant effect on
the likelihood of migrants becoming entrepreneurs upon return to the
home country.

6 Economic Power of the Diaspora

Recommendations
It is evident that remittances can have a strong impact on development, D. Cost of remittances and technology: The global average cost of sending
both at the macro and micro- level, especially as it has a multiplier effect on $200 was 7.1% in the first quarter of 2018, more than twice as high as
consumption, investment and economic growth. In order to ensure that the Sustainable Development Goal 10 target of reducing the transaction
remittances are being utilized in ways that are beneficial to the economy, costs of migrant remittances to less than 3%. Sub-Saharan Africa
below are some recommendations that could be implemented: remains the most expensive place to send money to, where the average
cost is 9.4% (about 25% higher there than in the rest of world).
A. Creation of platforms that increase accessibility of crucial information for However, these costs have been decreasing over the last 10 years, partly
Nigerians in the Diaspora. The Nigerian diaspora constitutes mainly because of the rise of mobile money technology. Today, mobile money
semi-skilled, skilled and highly skilled professionals. They are in need of transfers are two times less expensive than money transfer operators
credible opportunities of investment with assured returns on their and post offices, and almost three times less costly than transfers
savings and earnings. A platform where information on opportunities can through commercial banks. As mobile money technology continues to
be shared will help to reduce information asymmetry when it comes to expand, and its coverage and usage continue to increase across Sub-
investment opportunities. Also, it is strategically important for state Saharan Africa, it is expected to contribute to an increase in remittance
governments to also adopt these platforms to drive and attract flows.
remittance flows from migrant indigenes toward consumption,
investment and development in their respective sub-nationals. Several countries across the globe, including Nigeria, have developed plans
towards attracting investment from their diaspora community for national
B. Encouraging and creating pooled investment vehicles. One of the major development. Essentially, the extent to which the diaspora contributes to the
barriers to investing for those in the diaspora is the minimum amount of developmental affairs of a country will be determined largely by trust.
funds, which investing firms accept. Therefore, pooled investment
vehicles where members of Diaspora can be vetted and can aggregate Sub-national governments (states) across most of these countries are also
funds for private equity investment for example, would encourage tapping into the immense opportunities in the diaspora space.
greater investments.
In summary, what is required is a coherent policy framework to harness
C. Early-stage businesses with smaller financing needs, present another remittances into generating capital for productive investments for the
great opportunity for those in the diaspora to invest through angel growth and development of small and micro-enterprises, which will in turn,
networks. Facilitating these investment options in small-scale and create employment. In addition, remittances can be deployed toward
medium-scale enterprises, joint ventures and micro-credits become philanthropic activities which can serve as solutions for specific deficiencies
pragmatic and viable opportunities for the diaspora (Pande, 2014b). in the local infrastructure such as schools, hospitals and roads.
Such efforts will also encourage employment-generating activities,
reduce further emigration and save workers from exploitative conditions
abroad by providing them alternative livelihood options in their own
country.

PwC 7
 References

1. Adeagbo and Ayandibu,(2014). Impact of Remittances on Development in Nigeria: Challenges and Prospects, Researchgate
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income-countries-in-2018
 
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trends-in-africa/(Accessed 2 July 2019)
 
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europe-and-russia-stay-weak-pick-up-expected-next-year

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04/Migration%20and%20Development%20Brief%2029.pdf
 
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file:///C:/Users/solaiya001/Downloads/IndiasExperiencewithRemittancesaCriticalAnalysis.pdf

Authors Contacts

Andrew S. Nevin, Ph.D. Oluseyi Agbedana

Partner & Chief Economist Senior Manager
andrew.x.nevin@pwc.com oluseyi.agbedana@pwc.com

Omomia Omosomi Delia Asuzu

Manager Senior Manager
omomia.omosomi@pwc.com delia.asuzu@pwc.com

Acknowledgement
We would like to thank Yemi Akoyi, Michael Ogunremi, Simisola Olaiya and Olamide Obaleke for their contributions to the development of this report.

© 2019 PricewaterhouseCoopers Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Limited (a Nigerian limited liability company), which is a
member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.