Diaspora Remittances constitutes 83 percent of 2018 budget of the federal government, 11 times the Foreign direct investment flows in the same period and seven times larger than the net official development assistance received in 2017
By Maureen Chigbo
DESPITE the fact that Nigeria is touted to be the largest economy in sub-Saharan Africa, it accounts for only 3.7 percent to the total trade with the Economic Community of West African States.
Nigeria’s export to the rest of Africa is estimated at 12.7 percent despite that it accounts for nearly 20 percent of continental Gross Domestic Product, GDP, and about 75 percent of the West Africa economy.
This notwithstanding, Nigeria’s economic outlook offers strong business growth prospects and this will be bolstered in the future by growing importance of digital financial services. Real GDP is projected to grow by 2.3 percent in 2019 and 2.4 percent in 2020 as implementation of the Economic Recovery and Growth Plan gains traction. This is against the six percent growth the country achieved between 2011 and 2014 before the economy went into recession in 2016. It exited recession in 2017.
Mudashiru Olaitan, director, Development Finance Department, Central Bank of Nigeria, CBN, provided the statistics in his keynote address at the Future Banking Tech West Africa Summit which took place in Lagos on Tuesday, April 23.
Olaitan, who was represented by Paul Oluikpe, assistant director, Financial Inclusion Secretarait, Development Finance Department of CBN, quoted PriceWaterhouseCoopers, PwC, outlook report for 2019, stating that diaspora remittances continue to support the economy.
“An estimated $25 billion in remittances (representing 6.1% of GDP) was recorded in 2018. The figure translates to 83% of the Federal Government budget in 2018, 11 times the FDI flows in the same period and 7 times larger than the net official development assistance (foreign aid) received in 2017,” he said.
Nigeria is projected to add no fewer than 200 million people to its current population of 196 million between 2018 and 2050. “The country is expected to surpass the United States, currently ranked the third d most populous in the world by 2050 while youth (under the age of 30) – which currently is more than half of the population – will continue to expand rapidly,” Olaitan said.
A study by Mckinsey Global Institute in 2016 estimates that DFS is capable of getting 1.6 billion adults on-board the formal financial system and boost the Nigerian GDP by six percent by the year 2025, thereby creating 95 million jobs. This makes DFS and FinTechs an indisputable focal point of Nigeria’s financial inclusion and economic growth strategy.
According to 2018 edition of the Enhancing Innovation and Access’s, EFInA’s, Access to Financial Services in Nigeria survey, out of the paltry 18 percent adult Nigerians that were aware of mobile money, only 3.4 percent have used that as a transaction channel. This is a sharp contrast to the level of internet connectivity and mobile phone penetration (68.9 percent of adult Nigerians own a mobile phone). Equally important is the fact that about 82 percent of Nigerians receive their main income in cash, and this calls for a change.