Remittances are transfers of money by citizens of a country in the diaspora to their home country. These funds do not necessarily come in because an economic activity has been exchanged. These remittances typically go into support for their families at home, real estate investments, and short-term investments in securities like treasury bills and other financial instruments.
Remittances have been a lifeline for Nigeria’s foreign exchange stability because Nigeria is an import-dependent nation. Foreign exchange earnings generated from trade are insufficient to keep the currency stable.
In 2025, total remittances stood at $21.8 billion, compared to $947 million in 1996. This represents a growth of over 2,000 percent over a period of 29 years.
International money transfer operators such as Western Union, MoneyGram, and Ria used to be the major channels for remittance transfers. However, there are now several fintech apps that have made the transfer of these funds easier.
There are, however, some issues which the current Minister of Finance, Taiwo Oyedele, drew attention to in 2024. He argued that at least $18 billion out of the $20 billion remitted into Nigeria in 2023 did not enter Nigeria in its original currency form.
These apps allow Nigerians abroad to deposit foreign currency, while the recipient in Nigeria gets the naira equivalent, while the money in its original denomination remains in the country of source. This is a leakage in some senses because, if the money had entered Nigeria in its original forms, such as dollars, pounds, or euros, it would have helped the economy more.
Efforts were made by the CBN to stop this in 2021, when a directive was issued stating that transfers must be received by recipients in the original currency and not in naira. This policy was later reversed by the current CBN Governor.
The CBN Governor, Mr. Cardoso, also said he set up a special committee with the task of doubling diaspora inflows. If this succeeds, support for families, investments in Nigerian securities, and real estate investments could improve drastically.
FINAL THOUGHT
Remittances have become one of the silent pillars sustaining Nigeria’s economy and foreign exchange market. While they provide relief for millions of households and help stabilize the naira, Nigeria cannot permanently depend on diaspora inflows as a substitute for productive economic growth.
The long-term solution still lies in building a strong export-driven economy, improving local production, and creating an environment where capital naturally flows into the country.
MACRO DIALOGUE
Do you think Nigeria is doing enough to attract diaspora funds through official channels, or should the government focus more on fixing the productive sectors of the economy?
Akinsulere’s Economic Notes
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