By Onome Amuge.
Agusto & Co.,recently projected that diaspora remittance flows into Nigeria will reach $26 billion by 2025, a significant increase from $20.1 billion recorded in 2021.
The pan-African credit rating agency, in a report titled ‘Nigeria Diaspora Remittances: A Tale of Emigration, Policy and Technology’, noted that the flows will be supported by improved economic conditions in advanced economies. This, it explained, is buoyed by the reality that remittances have proven to be positively correlated with the income of immigrants and economic conditions in the “sending countries”.
It further pointed out that remittances from the diaspora have played an increasingly essential role in Nigeria’s economy, serving as an important source of foreign exchange earnings and capital injections to stimulate economic growth and development.
“As more Nigerians, discouraged by the country’s gloomy economic conditions, look overseas for the opportunity, their remittances will continue to play a crucial role in sustaining the Nigerian economy. The growth of these funds has been exceptional, empowering dependents to meet their basic needs, pursue education, access healthcare, and embark on entrepreneurial endeavours,” the agency added.
The United Nations Development Program (UNDP) defines diaspora remittances as individual transfers from migrant workers, especially workers living in a foreign land for a year or more, to a recipient in his/her home country or country of origin.
According to the International Fund for Agricultural Development (IFAD), diaspora remittances are a crucial contribution to the well-being of migrants’ families and communities back home, as they help lift millions of migrant families out of poverty, and allow them to improve their access to health, education and housing.
A report by the international financial institution found that In 2022, over 200 million migrant workers sent $626 billion to 800 million family members in low- and middle-income countries. This,it noted, is more than three times the annual flow of official development assistance and exceeds foreign direct investment.
Dwelling on the report, Álvaro Lario, the President of IFAD observed that while migrants mostly send money to cover basic needs, it is estimated that recipients manage to either save or invest 25 per cent of the money they receive.
“One-quarter of these savings (US$25 billion annually) goes into agriculture-related investments. This amount is four times greater than the global ODA allocated to agriculture in developing countries,” he said.
Based on this development, analysts and stakeholders in the agricultural sector have emphasised that diaspora remittances have the capacity to provide much-needed initiative for agricultural investment in Nigeria and play a crucial role in boosting Nigeria’s agriculture sector, by providing capital for investment and helping to create jobs.
They contend that this is not a far-fetched idea being that agriculture is a capital-intensive sector, and many smallholder farmers in Nigeria lack the necessary capital to invest in inputs like seeds, fertilizers, and irrigation systems. Diaspora remittance, is therefore, considered a substantial tool to bridge the financial gap in the agricultural sector through the provision of funds that can be used to purchase inputs and improve productivity.
Commenting on the need for Nigerian diasporas to engage in agriculture,David Omololu Duyile,managing director of Riyden farm in Ita Eko,Ogun State, said that the agriculture sector is still largely untapped and presents a lot of opportunities for them to come on board at an early stage and actually build a brand that is not only good for distribution internally but presents a massive market across the global market.
Duyile, who started his agriculture investment in pig farming as a diaspora in the United Kingdom,noted that it is one of the biggest decisions he has ever made as it has provided him with a financial gratification beyond expectation.
He, however, observed that factors such as lack of information about pricing structure,wavering government policies, political and security instability, and poor knowledge about the agricultural terrain has dissuaded many Nigerian diasporas from investing in the agriculture sector. . Someone who wants to invest must have a clear idea of what he wants to do.
To encourage diaspora investment in the agriculture sector, Duyile said intensified efforts by the government in addressing issues such as corruption, a weak legal framework, and enforcement, political instability, and security concerns will make a lot of difference.
Duyile also called for the establishment of Public Private Partnerships (PPPs) aimed at providing awareness and accurate information on areas and agricultural avenues the Nigerian diaspora can leverage and make better decisions concerning business growth.
Evaluating opportunities for investment in the agriculture sector , Chinonso Okafor, senior research analyst at Nextier Advisory, a leading public sector advisory firm, remarked that research conducted on the agriculture value chain shows an estimated 15-25 per cent return on investment which is a remarkable potential.
“Agriculture is beyond farming,cultivation of crops but a business that covers a wide range of value chains and wealth creation opportunities,” he noted.
Speaking on one of the agricultural sectors worth investment, he noted that there is a big market in the leather business value chain, adding that its numerous value chains offer diverse business opportunities that Nigerian diasporas can tap into.
To promote Nigeria diaspora investment in agriculture, Okafor asserted that there must be an investment vehicle run by fund managers that understand the dynamics of the business such as the interest rates,competing interest rates, returns,duration of investment and other managerial factors so as to boost investors’ confidence.
He also called on the Diaspora Commission (NIDCOM) to establish partnerships with international organisations, the Central Bank of Nigeria, as well as other relevant government/private agencies, towards creating technical or financial support that would persuade diasporas to invest in the agriculture sector.
Bright Onime, a financial economist and researcher at the University of Port-harcourt, argued that remittances have a positive effect on food security.
Onime, in a research article titled “Do Diaspora Remittances Guarantee Food Security in Nigeria?”, found that a robust relationship exists between remittances and food security in both the short and the long-run period.
“In the short run, a positive and significant relationship was observed between remittances and food security in the current period such that a 1 per cent increase in remittances was associated with a 5.03 per cent increase in food security,” the report showed.
Following the above findings, this research recommends the design and proper implementation of a diaspora and remittances policy to cater for the welfare of Nigerians in the diaspora to improve remittances receipts and by implication, improve food security.
It also noted that Nigerian diasporas should be encouraged by the government of Nigeria with favourable and attractive policies for investment in the homeland.