Diaspora remittances to Nigeria
With this new development, fintechs who work in the remittance space have an excellent opportunity to address the challenges that numerous Nigerians face in receiving diaspora remittances from their loved ones abroad.
Nigeria, with its significant immigration trend and a substantial number of individuals sending remittances back home, presents a massive market for these remittance companies.
In 2022 alone, Nigerians living abroad remitted an impressive $19.8 billion back home in Nigeria, emphasising the scale and importance of this market in Nigeria.
Let’s examine how important remittances are in a developing economy like Nigeria.
Remittances contribute significantly to the country’s economic growth as a significant source of FX earnings which stabilises Nigeria’s balance of payments and ultimately helps the Naira.
Recent data suggest a 45% poverty rate in Nigeria, a very high level which, with easy and accessible remittance processes, can help reduce. People who receive funds from the diaspora can use them for basic needs like food, healthcare, education, housing and generally improve their living standards.
Financial inclusion is one of the drivers of economic growth as more people participate in the market. Remittances spur people outside the financial system to open bank accounts or mobile money wallets to receive remittances from their loved ones abroad.
When people go beyond using remittances to cover basic needs, they use these funds to start or expand small businesses contributing to the local economy. These remittances create jobs and employment opportunities for business owners and anyone they employ.
In a developing economy like Nigeria, where government spending is not robust enough, remittances can fund social investments like healthcare, education, and infrastructure projects, especially in rural communities.
Sending money back home is a way of engagement between the diaspora and those at home. Remittances ensure the diaspora maintains close ties with their home country and communities. This engagement can further lead to the transfer of skills and knowledge.