McDonald Onyema argues that the economic impact of migration is mixed
Migration is one of the variables shaping economic activities across the globe. While the justification for migration may not be questioned, there is no harm in being curious about its impact on economies. Inevitably, like most other phenomenon, there are losers and gainers in this era of global migratory shifts. As Europe and other developed nations of the West, welcome millions of solicited and unsolicited immigrants, the developing nations of West and sub-Sahara Africa are telling a different tale.
Available reports suggest that international migration from Africa has increased significantly to about 67% between 2000 and 2017. Conventional factors such as unemployment, wars and the search for improved livelihood as well as the many other socio-economic issues plaguing developing nations remain the major drivers of this growing trend. Historically, migration within Africa is as old as the story of man. The invasion of the African soil by the whites and the perception that Africa was a cheap labour source for the plantations cropping up all over the old Europe, fueled early international migration from Africa. The story of migration from the land area now known as Nigeria is not too different either.
Fast forward to the early 1950s, and late 1960s, there was a positive tilt in Nigeria's migration story given that migrations within this period was informed by the need to acquire foreign education. The movement of people was mutual as the Westerners also found in Nigeria, a horizon of prospects. However, the post-civil war era announced the receding echoes of the nation's greatness which worsened in the 1990s and with it also came the desperate exit of people as citizens, driven by hardship, lack and uncertainties, sought for ways to leave the country.
The Sahara-desert became the exit route for many, and Nigerians, in desperation resorted to the suicidal Cross-Sahara trips into European nations. Nigeria may not have felt the impact of this exodus at that point in time given that these were majorly its crop of unskilled population. While one cannot ignore the exits, the attention it drew was more of a statistical activity than a real economic conversation. However, the trends are changing. Young Nigerians seem to have adopted a new Nigerian dream which is to leave the country at all means, possible. Western nations, having come to the realization that it has become increasingly difficult to stop illegal immigration, have shifted from immigration deterrence, via border control and harsh immigration policies to a more relaxed, more structured and strategic programmes targeted at attracting the best of immigrants.
Although illegal migration persists, Nigeria's educated, and comfortable middle class have responded to the call by Western countries to further advance the Western economies. This is being driven through various well-planned immigration programs deployed by these countries. This ranges from the Canadian Express Entry Programme, the Australia Skilled Migration Programme, the Italia Start Up Visa, to the STEM programme recently introduced by the UK government. The terminologies and the approach for the various programmes may differ, however the objective of plucking off willing experts from less attractive economies to more comfortable and advanced economies remain same.
Nigeria, as usual has become a willing victim. In a time and season when hopelessness hangs in the air like the ancient sword of Damocles and the leadership is at best, uninspiring, one will not question the motivation for the mass exit of the nation's brightest. For a country whose economy is mostly private-sector driven, with the bulk of government agencies, acting as obese economic liabilities, this may be its worst moments, as the manpower fabrics of private organisations are being stretched to limits. This exodus is not discipline specific and no sector is spared.
A clear example is the reported declaration by the Lagos State Teaching Hospital that it is lacking the relevant staff strength to keep up with its patients. This is not surprising, given that as at 2016, about 5000 Nigerian doctors were registered and practicing in the UK. Further, the Medical and Dental Council of Nigeria (MDCN) reported that out of a total of 72,000 doctors captured in the nation's database, 35000 are currently practicing outside the country. While the situation is unarguably pathetic, the story from the health sector is not too different from the experience in the financial service industry.
The audit firms in the country are in a fresh struggle with audit firms in Europe, who in the wake of the Brexit move, now find Nigerian auditors attractive and have lured them over with juicier contracts, saner environments and a more humane system. The banking sector too is not spared, neither is the education sector immune to this mass migration of trained and qualified individuals. The struggle to manage staff turnover has gone beyond the conventional contest between local employers trying to offer better packages and perks to attract or build employee loyalty.
There is a demand for more, which cannot be met by the Nigerian work environment. The current competition for brains, is being led by government of nations, supported by willing employers. This has ushered in an era where conscious organisations are doing their best to create work cultures and environments beyond the norm, knowing that the competition is global. In the pursuit to meet this standard, importance has been placed on trainings, salary reviews and staff development. In the days ahead, it is expected that companies will report increasing payroll cost in addition to the already high cost of production in the country.
Nigeria has a progressive tax structure, capped at 24% under its Personal Income Tax system. Under this system, the PAYE deducted per individual, at the various tax bands increases as the income of the employee increases. Given that the target migrants are mostly midlevel to senior level employees, there may be a significant drop in the PAYE remittances to individual states of the federation. For instance, a midlevel or a senior employee with a monthly gross salary of N450,000 will contribute more to the tax coffers of the government than an entry level or junior staff with a gross monthly salary of N150,000. One can argue that the exit of the senior employees will create room for replacements by the new employees joining the workforce. However, the new entrants will still be at the lower cadre of the tax band and will not buffer the impact that the exiting migrants will have on the tax records of the relevant states.
The exit of the higher earners will also affect the purchasing power of individuals as well as goods being purchased per time. Revenue from VAT may reduce with declining purchasing power of consumers. Q3 2019 reported a drop in the VAT collected. Whilst stakeholders continue to speculate on the reason for the decreased VAT collection, it may not be totally unconnected with the exits of Nigeria's moderate to high income earners.
The exit of professionals with the experience to drive the nation's critical sectors may usher in a slow but sure human resource crisis mode. Nigeria may no doubt be facing a second bout of brain drain. People with less qualification and experience may be left to drive critical processes. The learning curve increases, same with the inefficiencies that come with straightening a curve. While the demerits of the mass exodus of Nigeria's able and young raises a lot of concerns, it is pertinent to state that it is not all dark and cloudy.
Migration no doubt has its positives. There is no gainsaying that it has created more room for new minds to break into the Nigerian labour force. While available statistics suggest that the nation's unemployment rate is critical, there is no doubt that it would have been worse if everyone has been stuck here with no opportunity for new people to enter the labour force.
A 2019 report placed Nigeria's diaspora inflow for 2018 at US$23.63 billion. This represents about 6.1% of Nigeria's GDP and 7.4 times higher than net development inflows from foreign aids. It is expected that this figure will continue to grow given that majority of the Nigerian migrants are gainfully employed and will have the capacity to remit funds home.
For a nation in severe need of leadership, rebranding and a total change of attitude to life, it will no doubt be a plus if a significant number of its citizens can experience the workings of saner climes with the hope that in the years to come, this would trigger a re-orientation and bring about the desired change.