Do you send money from USA to Nigeria? If so, your funds may be doing more than just helping your friends or family members. That money may actually be helping the Nigerian economy as a whole. Here’s a look at what’s happening.
Remittances Are More Helpful Than Foreign Direct Investments
According to Benedict Oramah, the president of the African Export-Import Bank, global remittances are actually more beneficial to a country’s economy than foreign direct investments. Oramah isn’t the only expert expressing these thoughts—the World Development Foundation has issued similar comments that mirror that idea.
The principle behind this concept is that when individuals send money from USA to Nigeria, that money goes directly into the economy. In some cases, it bolsters existing industries, and in other cases, it’s used to create new industries and resources that can help entire communities.
Expat Remittances Outpace Exports in Many Areas
Another reason that global remittances have such a powerful effect on the economy of various countries is due to the size of the remittances relative to the size of the economy as a whole. For instance, in Nigeria, expats sent about $20 billion into the country in 2015. That is four times the size of the foreign direct investments that were made during that same time period.
This isn’t just happening in Nigeria, and the movement isn’t restricted to sub saharan Africa either. In Egypt, expats also send in payments that are roughly four times the amount of foreign direct investments sent into the country, and beyond that, remittances account for nearly three-quarters of the country’s export revenue.
Remittance Funds May Be Enough to Cover Infrastructure Costs
When you send money from USA to Nigeria or from other countries to Nigeria, you are just one of the people doing so. When you put together all the money being sent in that direction, it represents enough to cover key infrastructure issues.
Currently, experts estimate that the entire continent needs about $93 billion for infrastructure projects every year. Luckily, people sending money to Africa actually send in more than that amount. Currently, expats are sending in about $110 billion per year. If harnessed correctly, that could be enough to cover all of the continent’s infrastructure needs.
An Engaged Diaspora Helps Countries Succeed
As an expat, you are part of the African diaspora. Many countries in Africa as well as other parts of the world are finding that they are more successful if they engage members of their diaspora. Different countries are approaching this relationship in different ways. For example, the Philippines is allowing people who leave the country to contribute to its Home Development Mutual Fund and to continue accessing their social security coverage.
When countries make moves like this, it helps to foster a connection between the people who have left and the people who are still living in the country. This can make joint ventures more possible, and it increases the possibility of members of the diaspora investing in their home country. When you send money from USA to Nigeria, you indirectly indicate that you care and that you may be willing to take additional steps in the future.