It’s no secret that Nigeria ranks among the top recipients of remittances globally. Every year, millions of Nigerians living abroad send billions of dollars home to help support their families, invest in businesses, and contribute to the country’s socioeconomic progress.
- Remittances from Nigerians abroad play a significant role in the country’s economy, reaching $20.93 billion in 2024, a 5-year-high.
- Despite significant naira depreciation, the diaspora continues to send money back home, citing family commitments and emotional ties.
- Fintech advancements in Nigeria, such as the rise in startup funding and tailored diaspora solutions, have also contributed to easier money transfers.
These remittances, which are often tiny sums given frequently, have grown to become a major pillar of Nigeria’s economy.
As an example, remittances reached a 5-year-high of $20.93 billion in 2024, underscoring a compelling narrative for Nigerians living abroad: emotional ties and family commitments often supersede economic logic.
Why Nigerians in diaspora are sending money back home Rationale 1
The Nigerian Central Bank, which presented the statistics, attributed its policies to the basis for the increase.
CBN Governor Yemi Cardoso credited recent economic reforms for the surge in remittances, with monthly inflows rising from $250 million early in 2024 to $600 million by September, as per a report by BusinessDay.
The policies in question include the unification of exchange rate windows, the adoption of a market-driven rate regime, and the introduction of the Electronic Foreign Exchange Matching System (EFEMS) to enhance transparency and efficiency in the forex market.
However, government policies alone fail to rationalize Nigeria’s remarkable diaspora remittance, considering that the Naira depreciated by 40.9% over the same period, completing the year at N1,535 per US dollar.
In fact, it could be argued that the volatility of Nigeria’s financial market constitutes a roadblock, as highlighted by Ravi Jakhodia, CEO of Moniepoint GB, who, during an interview with Business Insider Africa, stated;
“What we have seen generally is that the diaspora in the UK does not want to hold their value in Naira, so they do just-in-time transfers when they really need to spend that money in Naira.”
“I think the challenge with Naira is that in the past it has depreciated a lot, and it also continues to be very volatile, which makes it difficult for people to plan and budget for,” he added.
Also, given that the country, prior to the policies touted, has historically boasted some of the world’s highest remittance figures, the idea that the CBN’s recent policies are the sole reasons for the significant amount Nigerians in diaspora sent back home doesn’t necessarily ring true.
A small sample size of Nigeria’s UK diaspora remittance in 2021 highlights this point.
During the year, as per the Migration Observatory in the UK, the Indian and Pakistani diaspora stood as the only countries to remit more money back home than Nigeria, at £4.46 billion and £2.94 billion respectively.
The Nigerian diaspora, on the other hand, remitted £2.76 billion, higher than France, Germany, and China, which had £2.46 billion, £1.67 billion, and £1.24 billion, respectively.
The figure above underscores Nigeria’s incessant need to send money back home, especially when you consider that in the period under review, Nigerians in the UK accounted for 270,768 of the region’s 67.0 million total population, compared to India’s 920,000 people, 1.5%, and Pakistan’s 624,000 (1.0%), as per the UK’s office for National Statistics.
“You can say I send around £500 monthly, I obviously give some to my mom, say maybe £150 to £200 to my mom, I also give some to my brother, and then there’s my cousin, her mom is currently struggling so I have to send her some money to help her mom,” Mira, a Nigerian health care worker who in 2023 migrated to the UK revealed to Business Insider Africa.
“It’s not like my mom needs it, she’s doing fine, but that’s my mom, even when I was in Nigeria, I used to send her money, talk less of now.”
Why Nigerians Nigerians in diaspora are sending money back home Rationale 2
A more in-depth look into the subject also reveals that the increase in remittances could also be attributed (albeit probably to a lesser degree) to financial tech within the channel.
Nigeria, one of Africa’s top four tech markets, alongside Egypt, Kenya, and South Africa, has seen a surge in tech penetration, particularly for fintech solutions.
As presently constituted, Nigeria has over 200 fintech services, all operating with the promise of servicing the unbanked.
In the first half of 2024 alone, Nigerian fintechs outperformed other African startups in funding raised.
Afridigest, a data and research platform focused on Africa, reported that Nigeria topped fintech funding among the continent’s big four tech economies, securing $140 million.
It was followed by Kenya with $97 million, Egypt with $35 million, and South Africa with $34 million.
In October of the same year, Moniepoint Inc., the Nigerian unicorn, successfully raised US$110 million in equity financing, one of the largest funds received by a fintech company in Africa.
Reports like this highlight how prevalent fintech solutions are in the West African tech hub, and conveniently, a good number of these fintech solutions offer services that ease the exchange of foreign currencies.
While this may appear to be oversaturation, these solutions are quite viable, to the point where even markets without an unbanked population, such as the United Kingdom, are embracing the scheme.
“I think the penetration of financial services is quite high in countries like the UK, and you know other similar markets,” Ravi stated.
“It is a bit different, and the way we see that problem is that some peculiarities hinder their (Africans in the UK) experience of the financial services offered to them, and that is what specifically we are trying to help with, by tailoring our solution for them and them only,” he added, rationalizing why Moniepoint decided to create a version of its service (MonieWorld) for the African diaspora.
SEE ALSO: 10 African countries with the lowest diaspora remittances
“MonieWorld has launched the first product, which is to help with remittance, and we are already getting great customer feedback that we are faster, we are a better experience than what they have experienced,” he added.
This initiative, alongside other similar products, highlights the importance of seamless transactions to the growth of remittance inflows into Nigeria.
Why Nigerians Nigerians in diaspora are sending money back home Rationale 3
While a large portion of diaspora remittance goes into meeting basic needs like education, healthcare, and household expenses, it is hard to ignore the fact that a significant share can sometimes be directed toward entrepreneurial and capital projects.
Outside of real estate investments, which have become commonplace, Nigerians living overseas tend to invest in SMEs, which are typically handled by trusted relatives or partners on the ground.
These include businesses in transportation (such as ride-hailing or logistics), food processing, fashion, hospitality, and retail.
SEE: Nigeria’s central bank abolishes FX caps to attract billions from diaspora
“There’s this fish business my mother began, and I send money to her to help grow the business,” Mira revealed.
“There was also this keke business my friend told me about, the total cost was around N500,000, so my friend and I sent about £250 each. We saw the business on Instagram and when we inquired, they promised us they would buy a keke and hire a driver, and then the business would begin to bring profit, so we sent the money,” she added.
When asked if the business had yielded any returns, Mira responded, laughing, “Well… not quite, but we are hopeful.”
She also revealed that twice a year, she sends money to a charity organization that feeds disenfranchised school children, as she was a senior member of the group before she left for the UK.
Remittance inflows into Nigeria in recent years
In 2023, Nigeria accounted for 35% of Sub-Saharan Africa’s diaspora remittance, receiving $19.5 billion.
This figure falls short of the country’s remmitance high in 2018, when $24.2 billion was remitted back to the West African country.
The following year, the country received $23.80 billion, a marginal drop from the year before, and in 2020, during the COVID-19 pandemic, Nigeria received its lowest remittance inflow in recent years at $17.2 billion, owing to the shutdown of economic activities globally.
Since then, the remittance inflow has steadily recovered, now reaching its 5-year high in 2024.
Given how tight-knit the Nigerian family unit is, Nigerians who travel abroad feel deeply compelled to send money back home.
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“Yes, I send money back home to family, friends, and my cousin, but the most consistent is my family, I send to my mom and dad every month,” Gabriel, a Nigerian data analyst in the UK, told Business Insider Africa.
“It’s not like I have to, I just send money back home cause I have disposable income, sometimes I can send N40,000, sometimes I can send N120,000 to my folks, it’s usually within that range,” he added.
In addition to being monetary transfers, the billions of dollars that Nigerians living abroad send home each year are also gestures of love, responsibility, and hope.
The strong emotional ties to family and community are what motivate these remittances, even though economic changes and financial innovations may have made these transactions easier and more frequent.
