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SPECIAL REPORTS

The Economic Power of Nigeria’s Diaspora – PwC Report

Proper Diaspora Remittance Management Could Add 0.4% To GDP Annually - Expert

According to the IMF, remittances represent household income from foreign economies arising mainly from the temporary or permanent movement of people to those economies. Remittances include cash and noncash items
that flow through formal channels such as electronic wire, or through informal channels, such as money or goods carried across borders.

The importance of remittances is in the role they play in economies. They help poorer recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses, service debt and essentially, drive economic growth. Empirical studies show that the primary benefits of remittances to recipient households is the improvement in their general welfare. According to analysts, 70% of remittances are used for consumption purposes, while 30% of remittance funds go to investment-related uses.

Global remittances and trends
The World Bank estimated that global remittances grew by 10% to $689 billion (2017: $633 billion) in 2018, with developing countries receiving 77% or $528 billion of the total inflows. India, China, Mexico, the Philippines and
Egypt are among the largest remittance recipients globally, collectively accounting for approximately 36% of total inflows.

The official recorded remittances are much lower than the actual remittances that take place through official and unofficial channels. Remittances through informal channels could add at least 50% to the globally recorded flows (World Bank, 2006, ibid. 85). Freund and Spatafora (2005) estimate informal remittances to amount to between 35 and 75% of officially recorded flows.

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About Author

Victor Okeh is a graduate of Economics from Lagos State University. He is versatile in reporting business and economy, politics and finance, and entrepreneurship articles. He can be reached via – [email protected]

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