Nigeria, being the biggest remittance centre in the entire African sub-continent received more than $25 billion as remittances in 2018. Yet, 87 million Nigerians are living in extreme poverty which is the largest in the number.
Non-recipients of remittances have shown a negligible change from the state of poverty as compared to the families receiving remittances. Further, the recipients use this money to spend on basic household expenses.
Remittances uplift the overall standard of life. In that line, the recipients spend the financial aid on crucial social amenities including education, health, and better housing. Remittances allow Nigerian families to improve their creditworthiness and strengthen them to take part in the formal economy. Collectively, the overall nation benefits from this increased contribution.
So, what should be done?
The Nigerian government is yet to lay down specific policies to constructively use the revenue generated through remittance inflow. World Bank has also recommended the Nigerian government to strengthen its remittance policies by lowering the transaction costs. In the meantime, it is important to understand that things are not as simple as they sound. There are after-effects of every single decision. In the case of developing nations, they have to overcome the problem of brain-drain.
Even renowned global financial institutions have pointed out that the overall remittance trend is causing money-drain.
Educated Nigerian youth that returns to his or her own country, generally, prefers imported goods instead of local products and services. At the same time, one can argue that remittances help limited Nigerian families. But those who become successful, start getting attracted towards western culture. Consequently, their preferences and spending structure changes. And, a major part of the money starts flowing towards foreign investors instead of the national economy.
This is a concerning issue. However, in the short-term, especially in the current scenario, this influx could significantly help poor and struggling Nigerian families earn a piece of bread. To conclude that remittance alone can change the course of the downtrodden Nigerian economy would not be right. But in the end, it’s the Nigerian government that needs to take notable initiatives to strike a balance between the pros and cons of foreign aid, investment, and remittance.
It would be best for the Nigerian government to best let the remittance trend benefit its backward communities which are struggling the most. Lack of education is leading to unemployed people joining the rebels, especially in Southern Nigeria.
Coping up with insurgents would require more federal reserves to be allocated for security. The same security budget that exceeded $1.7 billion in 2017. If the same trend continues, it would continue to take its toll on the economy. Moreover, the Nigerian families that could be assisted sooner will keep suffering for a longer time. This would further stimulate more anger, distrust and feeling of rebellion among the common people. Hence, it is a vicious cycle that needs to be stopped as soon as possible.
Although this is just one of the many reasons, it is crucial for the government to control the situation now. To achieve that, the Government of Nigeria (GON) must check the fluctuation in social spending (budgets for education and health of Nigerian families).
Lastly, A Note for the Nigerian Families
At the same time, Nigerians need to actively participate in the Nigerian economy by limiting the use of cash. To understand the extent to which this can help on a global level:
Digital and cashless services, if accepted worldwide, can save enough revenue for 30 million books for schools and 20 million school uniforms in low-income nations. This can be a boon for at least 200,000 out of 12 million (highest in the world) out-of-school Nigerian children.
Although the government has a major role in uplifting the economy of the country, Nigerian migrants can also play their role by opting for the best money transfer services as the banks are unable to provide them with the same. To achieve this, FAZRemit provides the cheapest money transfer services to Nigeria from the USA. Because of the fastest transaction speed, FAZRemit ensures that every beneficiary receives the money at the right time. This could be just the first step towards revolutionizing the way migrants send money to Nigeria but it is undoubtedly the need of the hour.