Remittances are monies sent by migrant workers or members of a diaspora community to their families, friends, colleagues, business associates or acquaintances for support, gift or business course. Much of the monies sent are used to cater for basic needs such as food, clothing and shelter.

Remittance is a means of sharing prosperity from high-income countries to Low-Middle Income Countries (LMICs). Incomes are largely redistributed via remittances. In a report on Remittances in November 2022 released by the WorldBank, over $626 billion were remitted to LMICs through formal channels, this represents over 9% increase from the value remitted in 2021, $597 billion.

*EAP = East Asia and Pacific, ECA = Europe and Central Asia, LAC = Latin America and the Caribbean, MENA = Middle East and North Africa, SSA = Sub-Saharan Africa

Source: WorldBank and EGDC

Remittances contribute to the economy of nations by helping to improve the well-being of households in private consumption smoothing, promoting the accumulation of human capital through improved healthcare, higher and quality educational achievements, facilitating asset accumulation and business investment and helping recipient households become resilient, especially in the face of disasters.

In some Low and Middle Income Countries (LMICs) such as Tonga, the ratio of remittance to GDP is 49.9% (WorldBank data, 2022) while in Nigeria the ratio of remittance to GDP is less than 5%.

In Sub-Saharan Africa, Nigeria, the largest remittance-receiving country with $20.9 billion remittances received, accounts for over 39% of the total remittances to the region. Remittances to Nigeria in 2022 represent a 7.2% increase over the year 2021 ($19.5 billion).

What do remittances mean to Nigerians?

Quite a number of Nigerians have benefitted from remittances. However, as pointed out earlier, remittances are largely used for basic needs or survival as it may be. I believe that if much of the remittances are used for human capital development, training and production of goods and services that the people of the world want, this will help grow the country’s GDP. One reason for Africa lagging the world is human capital deficiency.

With efficient use of remittances in huge investments in the people, much development can take place in the shortest period of time leveraging on the available technologies.