By Dr Ibrahim Modibbo
In the race towards globalisation and multiculturalism in modern economies, consensus is built around strategic thinking for the common good of the people. Conscious of the enormity of myriad of problems confronting the Nigerian economy, the Central Bank of Nigeria is strategising with focus on exploring the threshold of the problems with a defined trajectory of revamping the economy.
In a world increasingly driven by the movement of people, the financial contributions of Diasporas are becoming indispensable to many nations’ economic development.
For Nigeria, a country with one of the largest diaspora populations globally, remittances should be considered as a critical lifeline, not only for millions of households but for the national economy.
Recognising this potential, the CBN under the leadership of Governor Olayemi Cardoso has embarked on a strategic campaign to strengthen the ties between the Nigerian diaspora and the country’s financial system, with the objective of turning remittances into a powerful engine for sustainable economic growth.
At the heart of this initiative is the CBN’s recent engagement in Houston, Texas, United States of America, where the Deputy Governor (Economic Policy), Muhammad Sani Abdullahi, led a team of stakeholders in a forum titled: “Optimizing Remittances to Nigeria: A Vision for the Future.”
The forum, which featured representatives from the Nigeria Inter-Bank Settlement System, major Nigerian banks, and International Money Transfer Operators, was part of a larger series of engagements to improve remittance flows and maximise their impact on Nigeria’s economic development.
Remittances are a crucial component of Nigeria’s economy, with the World Bank reporting average inflows of $20.5 billion annually over the past decade. However, much of this money is directed towards consumption, with only a fraction being utilised for investments that could foster long-term development.
This is where the CBN’s current efforts are groundbreaking. Governor Cardoso’s administration is focused on transforming remittances from mere tools of consumption into catalysts for growth, highlighting the importance of strategic investments in sectors like real estate, technology, infrastructure, and manufacturing.
In addressing the Houston forum, Abdullahi highlighted the importance of engaging the Nigerian diaspora in this vision, stressing the need to channel remittances into productive sectors that can spur inclusive economic growth, create jobs, and foster financial inclusion.
“We are committed to doubling the volume of capital inflows and remittances to Nigeria,” Abdullahi said, reiterating Governor Cardoso’s focus on strengthening Nigeria’s macroeconomic fundamentals to create an enabling environment for private sector growth.
The point cannot be overemphasised that the Governor Yemi Cardoso-led CBN has taken a bold and laudable step. With over 20 million Nigerians living abroad, most of whom are professionals doing exceptionally well, the potential for remittance inflows is enormous.
If well-harnessed through targeted policies, roadshows, and greater financial literacy, the Nigerian diaspora can become a significant driver of the country’s economic resurgence.
Nigeria is not the first country to recognise the potential of diaspora remittances as a key driver of economic development.
Countries like India, Mexico, and the Philippines have successfully tapped into their diaspora populations, transforming remittances into long-term investments that have fuelled economic growth.
India, for example, has one of the largest diaspora populations in the world, and remittances have played a pivotal role in its economic development. In 2022 alone, India received over $89 billion in remittances, accounting for approximately 3% of its GDP.
The Indian government created various investment-friendly policies and programs that encouraged its diaspora to invest in infrastructure, real estate, and business ventures. These initiatives transformed remittances from a safety net into a source of capital that has helped modernise India’s economy, improve infrastructure, and boost employment.
Similarly, Mexico’s remittance inflows – largely from the United States – have been instrumental in reducing poverty and improving education and healthcare in rural areas. By fostering financial inclusion and providing investment opportunities, the Mexican government ensured that remittances were not just a stop-gap measure for consumption but also a foundation for long-term national development.
Nigeria can – and should – follow this examples. The bold step by Governor Cardoso and his team in initiating direct dialogue with the diaspora is a critical first move in this direction. With the right policies, including lower transfer costs, improved access to financial services, and incentives for investment, Nigeria could not only increase remittance inflows but also ensure they contribute to the country’s sustainable development.
One of the more immediate effects of harnessing remittances effectively is the potential impact on the value of the Naira. As more foreign currency flows into the country, the supply of foreign exchange increases, helping to stabilise the local currency. With Nigeria’s current struggles with exchange rate volatility, boosting remittance inflows could play a significant role in strengthening the Naira.
Governor Cardoso’s strategic vision is timely. If, without targeted efforts, Nigeria has been receiving $20.5 billion annually, there is no reason to believe that with proper engagement, these figures cannot double or even triple in the next few years. As the CBN continues its outreach to Nigerians abroad, more opportunities will open up for the diaspora to contribute to Nigeria’s development in meaningful ways.
This is a point some of us have been advocating for years: with the unprecedented number of Nigerians in the diaspora, if a proper roadshow and guidelines are put in place to encourage more remittances, it will not only boost development in the country but also strengthen the value of the Naira. Governor Cardoso’s initiative marks a pivotal moment in this ongoing discussion and deserves applause for taking such a bold and innovative step.
One of the key takeaways from the Houston forum is that collaboration is crucial. No single institution can unlock the full value of remittances alone. As noted by Dr. Oliver Alawuba, the Group Managing Director of UBA, the combined efforts of banks, regulators, fintechs, and international transfer operators are essential to creating an ecosystem where remittances can thrive. This is especially important as remittances transition from being a safety net for individual households to a tool for national development.
The collaboration among the stakeholders is key as seen at the Houston event, ensuring that remittances are not only easier to send but also more cost-effective. By doing so, remittances can serve as a powerful instrument for financial inclusion, giving more Nigerians abroad access to banking services, savings products, and investment opportunities.
With the current initiative, the CBN is positioning Nigeria to unlock the full potential of its diaspora population. The $20.5 billion in annual remittances is just the beginning. This figure could easily skyrocket in the coming years, providing the necessary funds for infrastructure development, job creation, and overall economic growth.
The bold steps taken by Governor Olayemi Cardoso and his team at CBN will soon mark a turning point in Nigeria’s economic journey.
With the vision of transforming remittances from a tool of consumption to an instrument of development, the CBN is not only empowering the diaspora but also driving the nation towards a brighter, more prosperous future. This is an initiative that deserves both recognition and support.
Ibrahim Modibbo Ph.D, writes from Abuja, Nigeria