Nigeria has been a member of the Organization of the Petroleum Exporting Countries(OPEC) since 1961. It would be wise to think exporting oil is its main GDP contributor. The fact is remittances from its diaspora increased by 19% to $24.3 billion in 2018. This is a new high for the Nigerian economy supposed to be oil-driven. Remittances from USA to Nigeria made up almost 30% of it. This is while crude oil exports fell by almost 30% during the same time.
Afrinvest, an investment firm, states that Nigerians in the United States are the main contributors to the remittance inflows.
What are the Absolute facts?
On the Oil-Driven Economy
Since joining the OPEC in 1971, Nigeria has seen little development economically other than in the last decade.
The highest oil output of 2464 barrels per day was attained in 2010. This was after heavy investment in oil-related infrastructure by foreign companies. With high fuel prices at the time, it seemed a step forward in the right direction. Fast forward just 7 years and you see the drop in production due to various reasons. Production reached a new low in 2017 when just 1738 barrels were produced per day by the OPEC nation.
On the Remittance front
“Nigerians living outside the country are the biggest export” according to the chief economist at PriceWaterCoopers (PwC) Nigeria, Prof Andrew Nevi. It is hard to not agree with him when the effect it has on the Nigerian economy is astounding. Out of $24.3 billion dollar remittance, almost $7.2 billion was remittances from USA to Nigeria. The increase of remittance flow by 20.8% makes the USA the highest remitting country to Nigeria.
What Do they Project?
Nigeria’s GDP growth jumped from 0.8% in 2017 to 1.9% at the end of 2018. This was still below the projected 2.3%, mainly due to variations in prices of crude oil and its output globally. Looking at the oil supply and demand on a global scale, there are various uncertainties. These are adversely affecting the Nigerian economy.
All this while the 3 million-strong Nigerian diaspora in the US contributes significantly to the growing economy. The remittances to Nigeria made up 83% of the federal government’s capital budget in 2018. $7.2 billion remitted by Nigerians in America was more than the entire capital expenditure for 2019. The capital expenditure of Nigeria stood at $6.7 billion for 2019. This is according to Afrinvest again.
What Does it all Mean?
Stats do not lie when they show that an oil-driven economy is depended on remittances from its diaspora. It is especially true for the Nigerian economy where remittances from USA to Nigeria play a part in it. These are used for the basic needs of the population in the sub-Saharan country. Health upkeep, education, and physical empowerment are the main spending areas of the nation’s population.
More Efficiency can go a long way
Total remittances grew from 4.86% to 5.86% of the total GDP of the country in 2018. It is, therefore, most important to make use of online services like FAZRemit which improves the efficiency of remittances. FAZRemit offers fast, affordable and secure remittances from USA to Nigeria. They also provide the lowest rates for remittances at 1.7%. And it can be done in an instant with its online platform.
Join today at FAZRemit, to remit money to loved ones in Nigeria.