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Online Remittances Are The Biggest Source of Nigerian Families’ Development

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…

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.

Complications

Even renowned global financial institutions have pointed out that the overall remittance trend is causing money-drain.

But, how?

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.

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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.

Recommendations

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.

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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.

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Buhari Wins – Nigerian General Elections 2019 Results – What’s Next?

Nigerian General Elections 2019 Results were announced by the Election commission of Nigeria on Wednesday, February 27, 2019, stating All Progressives Congress (APC) candidate – Muhammadu Buhari – has been…

Nigerian General Elections 2019 Results were announced by the Election commission of Nigeria on Wednesday, February 27, 2019, stating All Progressives Congress (APC) candidate – Muhammadu Buhari – has been reelected as the president of Republic of Nigeria. Defeating Atiku Abubakar of People’s Democratic Party (PDP), Buhari took the crown in 19 states out of 37 with a vote difference of 3,928,869 votes. Other smaller parties like Africa Action Congress (AAC) put up a good fight in selected regions like Lagos where it secured 8,910 votes. Meanwhile, the Young Progressive Party (YPP) and Alliance for New Nigeria (ANN) collectively gathered 38,665 votes.

Check Nigerian General Elections 2019 Results here

Nigerian citizens count on Buhari for taking strict actions against corruption as well before the election campaigning, he has been portraying himself as an anti-corruption crusader. However, the opposition had several questions for him. The presidential tenure that follows would be more challenging as many of Buhari’s own cabinet ministers and high-level officials have been charged for the same. At the same time, the public has been viewing these convictions as a positive sign of war against corruption.

Nigerian Serving Senator Charged for Corruption

Economic Challenges for the Government

Nigerian economy was negatively impacted in 2016 and since then, there has been a nominal growth in the overall economy. Meanwhile, the World Bank Organization is estimating GDP growth of merely 2.2% in the year 2019. At this rate, it would be extremely challenging for the Nigerian economy to roll repeat 2014 when it had crossed $550 billion.

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Figure: Nigerian GDP (2012 – 2022)

According to Statista report, Nigeria will not be able to achieve that feat before 2021 but if things go as expected, before the next general elections in 2023, the biggest African economy – Nigeria – would cross the $650 billion mark.

Although GDP consists of multiple parameters, an immediate action strategy is expected, moreover, mandatory for the elected government in the following sectors.

Poverty and Illiteracy

The huge divide between urban and countryside Nigeria, when it comes to electricity and power, is enormous. National Bureau of Statistics (NBS) report states that even though 4 out of every 5 homes in cities and urban areas have electricity but out of the total rural families (which constitutes 64% of the total population of Nigeria), 2 out of every 3 do not.

Nigeria – Second Worst Country in Electricity Supply

Overtaking India, Nigeria has become the country with the largest population living under extreme poverty. According to a report in July 2018 by the World Poverty Clock, 86.9 million people have been affected by the curse of poverty and some major reasons include corruption and overpopulation in the country. It can hereby be concluded that the first Sustainable Development Goal (SDG) prepared by the United Nations, aiming to end poverty by 2030 seems too far-fetched, especially for African Nations including Nigeria and the Democratic Republic of Congo which is expected to be the next to follow the suite and replace India to take 2nd position in the ranking.

Figure: Poverty estimation for Nigeria, Republic of Congo and India

More than 70 million Nigerian citizens including 11 million out-of-school children, and 60 million youth and adults, are illiterate. Furthermore, orthodox systems and communal obligations apart from lack of government’s ability to implement the policies, is simply worsening the problem even further.

For a booming Nigerian population (increasing at 2.6% annual rate), fulfillment of fundamental requirements including food, shelter, and education is imperative. However, the worsening numbers is an indication for the upcoming Buhari’s governance to pay special heed.

Oil, Agriculture, and Remittances

The largest oil-producing country in Africa and the 6th largest oil producer in the world, the oil-driven economy of Nigeria needs to diversify.

Agriculture-sector needs special attention because the fertile land of Nigeria and the agriculture produce, due to lack of Agro-technology, are not able to feed the mouths. Once a leading food exporter, Nigeria today imports food from other countries. This points towards the negligence of duty by the Nigerian officials and policymakers who instead of extensively investing in oil should have been improving the agriculture sector as well.

At the same time, remittance inflow is playing a decisive role in keeping the economy afloat which is why it becomes essential for the Buhari government to promote international transactions and mobile payments. Those who want to send money to Nigeria online need easier and economically feasible platforms and the government must take encouraging steps for the money transfer services, businesses and investors to develop these services. Needless to say, there are plenty of other sectors that need more importance but ignoring the remittance industry would be a huge blunder for Muhammadu Buhari’s government.

Tensions and Violence

Nigerian general elections 2019 results came along with the announcement of the winner but there were more than 39 casualties and hundreds of arrests which is although less than the 2015 general elections (when almost 60 people died in 61 reported election-related violence), the country has a long way to go before conducting, what in a democratic nation is termed as, fair and safe elections. It would be expected from Buhari to keep aside the results, as he portrays himself as a law-abiding and honest person, and ensure that the hard-earned democracy is kept alive and prosperous.

As promised, Buhari has had a huge impact on the Islamic extremists, Boko Haram, in the North which is one of the biggest reasons for Nigerian voters vouching for him and giving an overwhelming mandate to APC in the 2019 general election.

Figure: Nigerians protesting against Boko Haram

However, the problem of southern insurgency still remains. This makes Nigerian economic diversification even more important as the insurgents since the 1990s simply do not want to be exploited. Buhari has promised to resolve the Niger Delta conflict soon, however, there is no definite timeframe decided. The unrest among minority ethnic groups led to a significant vote-share shift towards PDP in the recent elections. After the elections, we will keep an eye on how Buhari balances the oil crisis and the southern conflict.

While taking strict action to curb insurgency and corruption, Buhari may be continuously alleged for usurping both judicial and legislative power. His past record of using military rather than diplomatic or democratic steps have been put under question but also suppressed by power. This is not a very good sign for the future of the Republic of Nigeria, however, with the entire world tending to shift towards a more strong and decisive right-aligned governments, Buhari seems to be the best choice available and his steps in the next 4 years will decide what will be seen and experienced by the Nigerian generations that follow.

At FAZRemit, we hope that “Unity and Faith, Peace and Progress” prosper in the Giant of Africa.

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Impact of Nigerian General Elections 2019 on the Nigerian Economy

Since the foundation of society and leadership, policies framed by the representatives has affected the lives of inhabitants. The difference that a good and stable government can have on the…

Since the foundation of society and leadership, policies framed by the representatives has affected the lives of inhabitants. The difference that a good and stable government can have on the present and future of a country is undebatable. And one of the decisive event(s) would be the upcoming Nigerian general elections scheduled on February 23, 2019, after getting postponed from February 16, 2019, by the Nigerian electoral body just a few hours before the polling time. This was seen by a majority of Nigerians as a huge blunder of an incumbent government that impacted the country’s international reputation.

What is Going on for the Nigerian Economy?

Nigerian economy has always been under the spotlight because of it being the biggest economy, having the largest population and topmost destination for online remittances among all other sub-Saharan African nations. As compared to the previous year, the latest report by PricewaterhouseCoopers (PwC), named as Nigeria Economic Outlook: Top 10 themes for 2019, states that Nigeria observed an overall remittance inflow of $25 billion in 2018 as compared to $22 billion in the previous year.

Remittances, Agriculture and Oil

The total remittance amount makes a major proportion of Nigerian economy contributing to approximately 6.1% of the GDP, however, with an economy that grew at a steady pace of 1.9% in 2018 as compared to 0.8% in 2017, the country is too far when it comes to the list of fastest growing economies in the world and for such a nation, migrants sending money to Nigeria in 2018 have surpassed the total foreign aid received in 2017 by 7 times.

This is a clear indication of the importance of remittances for developing nations like Nigeria that government needs to encourage more but at the same time, the above statistics also suggest that the agriculture sector (that makes over one-third of the total employment, ranks 6th in the world and 1st in African subcontinent) is facing the problem of overconsumption due to overpopulation and the high-agriculture producing country has been forced to import food to feed its own population.

Adding to the problems of the oil-driven economy is the fluctuation in oil prices in the international market along with a highly anticipated political uncertainty because of the 2019 Nigerian general elections that could affect the investors’ interests.

Slowdown of Investment?

Consequently, this could fuel the already unstable Nigerian macroeconomics. Although Nigeria has been a centre of attraction for global investors because of the potential of its booming consumer base, with the elections around the corner, the uncertainty of drastic policy changes post-elections seems to repel the capitalists from making more investment, thereby making a significant dent on the inflow.

It could further shoot up the Fiscal deficit that has already reached 3% of total Nigerian GDP after a 79% increase from the previous year. With 45% debt service to revenue mark as opposed to the government-estimated 31% and constantly increasing fiscal deficit, it is most likely that the Nigerian government would be turning towards issuing more domestic bonds.

Nigerian General Elections – Not for the Youth?

So, all in all, things don’t look very good for a country that has half of the population under 30 years of age and is suffering from a yearly population growth of 2.6% resulting in an exponentially increasing number of unemployed youth which is at an alarming 23.1% as compared to 18.1% in 2017.

Considering all these numbers, even after the #NotTooYoungToRun campaign, the Nigerian community can be said to be dominated by the older generation as although the youngest candidate in the general elections, Chike Ukaegbu, is running on an education platform, he is 35 years old.

All of the aforementioned points makes it imperative for the Nigerian government to check on a few steps that are bound to have a drastic effect on the overall Nigerian economy if not considered beforehand. It is most likely that election spending along with petrol prices and power tariffs would, at a great extent, cause inflation to worsen for which the Nigerian government does not seem to be very well-prepared. Also, the ones for whom leadership needs to take noteworthy steps are themselves not participating, or are not being made part of the change which is yet another concern as an inability to provide basic amenities like quality education, food, shelter and medicine is inducing the feeling of rebellion among the youth, especially the millennials who show a promising future if things go right.

Rising Insurgency…

Also, election time could also lead to political tension leading to a less-powerful but more actively operating notorious Boko Haram in the North and rebels in the south targeting the heart of Nigeria oil industry – Niger Delta.

The rebels were paid monthly allowances during Buhari’s regime, however, the uncertainty due to elections can flare up the tensions again. Consequently, this would have direct or indirect implication(s) on the economy and well-being of the natives and the state as a whole.

So, it can be concluded that the results and consequences are uncertain but without any doubt, the stakes are extremely high as the upcoming Nigerina general elections will play a decisive role in driving the future of Nigerian economy!

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