As mass emigration continues in the country, the Nigerian Diaspora remittances is expected to hit $26billion by 2025.
This is even as the Nigerian Diaspora remittances is expected to eclipse $20.1billion it recorded in 2021, in the current year.
According to recent 2023 Agusto & Co. report, it expects remittance flows into Nigeria to rise to about $26 billion by 2025, a development that will be supported by improved economic conditions in advanced economies.
Although Nigeria was the second-highest diaspora remittance recipient in Africa, trailing only Egypt ($28.3 billion) in 2021, recent event on emigration shows that the figure will be higher in the current year.
Given Nigeria's high poverty rate, which increases reliance on foreign aid, Agusto & Co. also anticipates that the need to finance the basic requirements of dependents to remain the most important element driving remittances in the near to medium term.
"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," it added.
Remittances from diaspora, the report stressed, 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.
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As more Nigerians, discouraged by the country's gloomy economic conditions, look overseas for opportunity, their remittances, the report added, will continue to play, a crucial role in sustaining the Nigerian economy, saying, growth of these funds has been exceptional, empowering dependents to meet their basic needs, pursue education, access healthcare, and embark on entrepreneurial endeavours.
On outlook, the report said, Nigeria's emigrant base is currently skewed towards the economically productive middle-class demographic, which is positive for remittances and underpins the need to devise strategies targeted at this age group to ensure the sustainability of remittances.
However, given the significant contribution of students to the emigrating population, Agusto & Co. expects a surge in remittance inflows in the medium term.
"In June 2023, the CBN liberalised the foreign exchange regime, doing away with market segmentation, collapsing all the segments into a single exchange rate window - Investors and Exporters (I & E) Window - and adopted a managed floating exchange rate regime.
"We believe that the unification of exchange rates would also incentivise remittance inflows through official channels, particularly for investment purposes, as it is likely to improve the FX liquidity position, which would facilitate the repatriation of funds," it pointed out.
